For a pharmaceutical manufacturing company, MVAT is to be charged on the MRP printed on the product.
But Central Government has said that the MRP of pharmaceutical products is inclusive of all taxes.
So how the tax calculation will be made ????
Isnt these two provisions conflicting as if we calculate VAT on MRP which is inclusive of tax (inclusive of VAT also, implied), it will amount to tax on tax ???
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VAT on MRP
Replies (2)
Dear, VAT is never calculated on MRP
Apply a backward calculation (inclusive extraction) or use statutory abatement rates to extract the base taxable value before applying the tax rate, ensuring the total stays compliant with the printed MRP.
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