Whether excise duty is part of turnover?

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 February 2017 Dear Expert,

Please advise if excise duty is part of turnover? Say a bill is of Rs. 100/- and excise duty is 20/- and vat is 5/-. Whether turnover is 100, 105 or 125?
How to present in balance sheet. They say, it has to be shown separately, viz, gross less excise duty = net sales.
Won't it downgrade the turnover?

Please help.

Querist : Anonymous

Querist : Anonymous (Querist)

07 February 2017 Dear Expert - I know this query may be a petty one, but my entire books are to be written on this concept. Please guide me.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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03 August 2025 Great question! Here's a clear explanation:

Is Excise Duty Part of Turnover?
Under Indian accounting and taxation practice:

Turnover / Gross Sales is generally considered net of excise duty but including VAT (now GST).

Why? Because excise duty is a tax collected on behalf of the government and does not belong to the business. So it is excluded from turnover to reflect the true revenue earned by the business.

Example:
Bill amount: Rs. 100 (this is the price of goods)

Excise duty: Rs. 20

VAT: Rs. 5

Turnover = Rs. 100 (price of goods) + Rs. 5 (VAT) = Rs. 105

But since VAT is a tax on sale, it depends on the accounting treatment and may or may not be included depending on whether you are considering gross or net revenue. Usually, turnover is net of excise duty but including VAT because VAT is part of sales price.

How to show in financial statements?
Show Gross Sales / Turnover excluding excise duty.

Excise duty is shown separately as a liability (if collected but not yet paid).

Net Sales = Gross Sales - Excise duty.

Does this downgrade turnover?
No, because turnover reflects the actual sale value of goods/services excluding taxes payable to the government (excise duty). Including excise duty inflates revenue figures artificially.

Summary
Component Amount (Rs.) Included in Turnover?
Price of goods 100 Yes
Excise duty 20 No (excluded from turnover)
VAT 5 Generally included*

*After GST implementation, VAT has been subsumed; in pre-GST era, VAT could be shown as part of turnover or separately based on accounting policies.

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