PLEASE PROVIDE WORKING NOTES ON:
Y LTD PURCHASED 500 UNITS OF RAW MATERIALS @ RS. 150 PER UNIT GROSS LESS 10% TRADE DISCOUNT SALES TAX IS CHARGEABLE @ 5% ON THE NET PRICE.
THE EXCISE DUTY ELEMENT ON PRODUCT IS RS.12 PER UNIT AGAINST WHICH MODVAT CAN BE CLAIMED.
THE COMPANY SPENT RS.1000 ON TRANSPORTATION AND RS 500 FOR LOADING AND UNLOADING.
CALCULATE THE COST OF PURCHASE OF RAW MATERIAL.
ANSWER IS RS.72,375.
CAN ANYBODY SAY HOW THIS ANSWER IS ARRIVED..
| Purchase price | 150 | |
| less : discount 10 | -15 | |
| Net Purchase Price | 135 | |
| Purchase Cost | 67500 | |
| (500 * 135) | ||
| Add :- Excise | 6000 | |
| (500 * 12) | ||
| TOTAL | 73500 | |
| Add :- Sales Tax @ 5% | 3675 | |
| Net Purchase Cost | 77175 | |
| Add :- Direct Expenses | 1500 | |
| (1000+500) | ||
| TOTAL | 78675 | |
| Less :- Excise | 6000 | |
| Purchase Cost (AS-2) | 72675 | |
For calculation of Sales tax , you need to add excise first, calculate total purchase cost then deduct amount of excise already added since MODVAT for the same is available...now this resultant figure wil be your purchase cost as per AS - 2
ls this right ?
Yes Vamshi Vuppala, your answer is correct. The solution above is wrong. Excise comes into picture only in production or manufacture. This is purchase.
Shyam Joshi & Associates
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