Cenvat

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mehul patel

mehul patel (Querist)
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01 December 2015 wat does CENVAT CREDIT exactly mean

Prakash Mundada

Prakash Mundada (Expert)
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02 December 2015 The term CENVAT credit refers to Central Value Added Tax. You may ask that it is observed in Excise. CENVAT is just an inspiration from the concept of VAT whereby we will pay the duty only after adjusting with the taxes which are already paid

For Example if we have purchased a good for 100 on which ED is 10 and it is sold for 150 on which ED is 15 then we will pay ED 15 - 10 and the amount is 5. The amount of 10 is called as Cenvat credit which was already collected by the person who collected from us and paid to the government
ultimately the government will get 10+5 = 15 at two different stages. That's it