What is the purpose achieved by asking client to reconcile his sales turnover reported in excise returns for the entire financial year with the turnover reported in the financials(i.e. Profit and loss A/c)? Basically i wanted to know why is a client asked to prepare reconciliation statement of excise with financials. According to me sales turnover reported in financials should reconcile with his sales tax returns because Excise duty is payable on production stage.
The sales turnover as per financials is required to be reconciled not only with the sales tax returnsbut also with excise returns. This is so because although the excise is a levy on manufacture but the duty is collected at the time of clearence of finished goods from the factory gate. Therefore the duty gets indirectly linked to the total sales effected during the relevant period in so far as the collection of duty is concerned. The total excise duty payable and deposited in a particular financial year therefore has to be corerelated with the total sales effected during that particular year. That's the reason for reconciling the sales/ turnover as per financials with the sales/ turnover as per excise records.
The sales turnover as per financials is required to be reconciled not only with the sales tax returnsbut also with excise returns. This is so because although the excise is a levy on manufacture but the duty is collected at the time of clearence of finished goods from the factory gate. Therefore the duty gets indirectly linked to the total sales effected during the relevant period in so far as the collection of duty is concerned. The total excise duty payable and deposited in a particular financial year therefore has to be corerelated with the total sales effected during that particular year. That's the reason for reconciling the sales/ turnover as per financials with the sales/ turnover as per excise records. its also to be noted taht there might be cases where liability for Excile arose without liability for salestax. eg samples issued etc.
My friend,though excise is a levy on manufacture of goods, the payment of duty is to be made at the time of clearance of the goods from the factory. Therefore in addition to reconciliation of turnover with sales tax, excise reconciliation shoudl be also demanded from the client. By Cross checking the turnover from both the angles you can save urself the burden of extensive sales vouching.
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