We have purchased MEIS license
from other party for our import purchase.
For Example.
MEIS license duty amt 100000
But we are paying 80000
Difference 20000
We are saving 20000
How to make saving 20000 Accounting entry.
And.
we have used MEIS 100000 for
paying import custom duty.
How to make accounting entry for 100000
Please guide us.
Thanks & Regards
Rajkumar Gutti
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MEIS License Difference amount
Replies (1)
| Here is the accounting treatment: 1. Purchase of MEIS License from Third Party: Dr. MEIS License (Asset/Prepaid) Rs. 80,000 Cr. Bank/Creditor Rs. 80,000 2. Utilization of MEIS License against Custom Duty of Rs. 1,00,000: Dr. Custom Duty Expense Rs. 1,00,000 Cr. MEIS License Rs. 80,000 Cr. Profit on MEIS Utilization (Other Income) Rs. 20,000 3. Alternative Treatment: Some companies net off the saving directly: Dr. Custom Duty Rs. 80,000 (net cost) Cr. MEIS License Rs. 80,000 (and show customs duty at actual cost paid rather than face value) 4. Income Tax Treatment: The Rs. 20,000 saving (discount on MEIS purchase) is taxable as 'Business Income' in the year of utilization. 5. GST Note: MEIS scrips (now MEIS has been replaced by RoDTEP/RoSCTL for most categories) — trading of such scrips may attract GST. Verify current DGFT scheme applicability and GST treatment on transfer of scrips. 6. Preferred Treatment: Option 1 (showing full custom duty and recognizing profit separately) is cleaner for audit trail and P&L transparency — recommended for most businesses. |
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