why value of cenvat is deducted from the cost of mat and ..
why state vat is not considered...
As per As 2 "Valuation of Inventory" duties and taxes
(other than those subsequently recoverable by the enterprise from the taxing authorities) is added to the cost of Materials or Goods Purchased.
If Cost of Material is inclusive of CENVAT/VAT and any other tax for which ITC available, than that is deducted from cost of materials.
And if value is excluding of CENVAT/VAT and any other tax for which ITC available, than that amount are not required to be considered as Part of cost.
Simply, duties and taxes for which ITC is available to person, than that is not considered as cost for inventory valuation.(So, if already added in cost than we have to deduct that..or if not added than don't consider it in cost)
or , if ITC for same is not available, than its considered as cost of inventory and added in cost if not added already.
CAclubindia
