Is vat amount should be including excise duty?

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Kishan (Querist)
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09 July 2015 Hi there,
My question is if Vat is 5% on excise bill whether it should be charged on including excise duty?

Arun Kumar Singh

Arun Kumar Singh (Expert)
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10 July 2015 Excise duty will be charged separately on the assessable value of the goods.

Kishan

Kishan (Querist)
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04 August 2015 So assessable value is Cost+ED right?

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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01 August 2024 Yes, in general, the assessable value of goods for the purpose of determining indirect taxes like Excise Duty (ED) or Goods and Services Tax (GST) includes the following components:

### **1. **Excise Duty (ED):**
For Excise Duty purposes, the assessable value typically includes:

**A. Cost of Goods:**
- This is the cost of producing or purchasing the goods.

**B. **Excise Duty (ED):**
- **Excise Duty** is calculated on the **transaction value** which is the cost of goods plus any other charges including excise duty, if applicable.

**C. **Other Costs (if applicable):**
- Any other costs associated with the goods, such as packaging costs, if they are not included in the cost of goods.

**D. **Freight and Insurance:**
- Freight and insurance costs are included in the assessable value if they are not borne by the buyer.

**Formula:**
\[ \text{Assessable Value} = \text{Cost of Goods} + \text{Other Charges} + \text{Excise Duty (if included in the cost)} \]

### **2. **Goods and Services Tax (GST):**
For GST purposes, the assessable value includes:

**A. **Transaction Value:**
- This is the price actually paid or payable for the goods or services. It includes the cost of goods or services and any other charges.

**B. **Additions to Transaction Value:**
- Any additional amounts such as commissions, packing charges, and other charges related to the supply of goods or services.

**C. **Freight, Insurance, and Other Costs:**
- If the supply involves additional costs such as freight or insurance, these should be included in the transaction value.

**D. **Excise Duty and VAT (if applicable):**
- Under GST, excise duty and VAT are subsumed, so they are not separately added to the transaction value for GST purposes. Instead, GST is applied on the inclusive value.

**Formula:**
\[ \text{Assessable Value} = \text{Transaction Value} \]

### **3. **Practical Considerations:**

**A. **Documentation:**
- Ensure all components included in the assessable value are documented properly.

**B. **Regulations:**
- Check the specific regulations and guidelines applicable to the indirect tax (ED or GST) as rules may vary.

**C. **Professional Advice:**
- Consult with a tax professional or advisor to ensure compliance with current tax laws and regulations.

In summary, for Excise Duty, the assessable value generally includes the cost of goods plus any excise duty, while for GST, the assessable value is the transaction value, which includes all additional charges and costs related to the supply.