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treatment of discounts for assessble value

2234 views 4 replies

how r various discounts treated for arriving at assessable value viz.

 

qty discount

trade discount

cash discount

 

pls help i am taking dec 2010 cwa inter exams

reg

ajay

cwa inter

 

Replies (4)

in the eyes of excise department , the invoice value is to be taken for calculation of tax liability. balance discounts if allowed prior to invoice value is ok, but post invoice, nothing can be claimed.

transaction value will become assessable value on the basis of net amount paid or payable hence all discount whether   cash or trade etc. will be excluded

All discount will be taken for calculated Assessable value.   if it is shown in invoice that will also taken for calculating excise duty amount.

Firstly u have to understand term :

Quantity Discount:

Incentive offered by a seller to a buyer for purchasing or ordering greater than usual or normal quantity of goods or materials, to be delivered at one time or over a specified period.

 

Trade discount :

Amount or rate by which the catalog, list, or retail price of an item is reduced when sold to a reseller. It is the reseller's profit margin and usually varies directly with the quantity of the item purchased


 Cash Discount:

Incentive offered by a seller to a buyer for settling the invoice immediately on delivery or in a period substantially shorter than the conventional period in that industry or market.

Answer:

All discount is deductible which made at the time of sale of goods for transction value (sec.4) . however discount given in nature of compensation for low grade quality material supplied after sale of goods is not allowed.


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