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A factory is registered in both Excise and Vat
Hence it gets input of Vat which is adjusted with Output Vat
Also it gets input of Excise and Service tax (called Cenvat) which is adjusted with Output Excise

It is normally of 3 types

TYPES OF CENVAT
Cenvat on Input Services
Cenvat on Inputs(Excise on Goods Used for Production like Raw Material,Consumables and Packing Materials)
Cenvat on Capital Goods

Note:-
No Input is available of
1.CST on Purchases and Expenses
2.Swachh Bharat Cess on Expense Bills
3.Krishi Kalyan Cess on Expense Bills
4.Excise and Vat on Goods not used in Production like Office Expenses

Since no Input is available of these 3,we do not make their Input accounts

EXCISE ENTRIES ASSIGNMENT

Details of Purchases

Purchase Raw Material

                          A LTD 
ParticularsAmount
Purchase96000
Excise 12.5%12000
Total108000
Vat 5%5400
Total113400

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Entry

Purchase Local 5% A/c Dr 96000
Input Excise(Cenvat on Inputs) Dr 12000
Input Vat 5% Dr 5400
                   To A 113400
(input of Vat and Excise is available in case of goods used for production)

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Purchase Raw Material

                          B LTD 
ParticularsAmount
Purchase32000
Excise 12.5%4000
Total36000
CST 2%720
Total36720

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Entry

Purchase 2% Central A/c Dr 32720
Input Excise(Cenvat on Inputs) Dr 4000
                    To B 36720
(input of Excise is available in case of goods used for production,however no input of CST)

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Purchase Packing Material

                          C LTD 
ParticularsAmount
Purchase16000
Vat 5%800
Total16800

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Entry

Purchase Local 5% A/c Dr 16000
Input Vat 5% Dr 800
                   To C 16800
(input of Vat and Excise is available in case of goods used for production)

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Details of Office Expenses

                      D LTD 
ParticularsAmount
Stationary6000
Excise 12.5%750
Total6750
Vat 5%337.5
Total7087.5

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Entry

Stationary Exp Dr 7087.5
                        To E 7087.5
(input of Vat and Excise is NOT available in case of goods NOT used for production)

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                         E LTD 
ParticularsAmount
Professional Charges20000
Service Tax @ 14%2800
Swachh Bharat Cess @ 0.5%100
Krishi Kalyan Cess @ 0.5%100
ED Payable23000

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Entry

Professional Expense Dr 20200 
Input Service Tax (Cenvat on Input Services) Dr 2800
                           To Max and Co 23000 
(No Input of both KKC and Swachh Bharat Cess for Excise Manufacturers)

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Details of Machines

                          F LTD 
ParticularsAmount
Machines(Factory)140000
Excise 12.5%17500
Total157500
Vat 5%7875
Total165375

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Entry

Machine Dr 147875
Input Excise on Machines 1/2(Cenvat on Capital Goods Current Year) 8750
Input Excise on Machines 1/2 Deffered (Cenvat on Capital Goods Deferred) 8750
                                 To H 165375
(Excise on Machines is available in 2 Years ,1/2 every year)
(Assuming Input of Vat on Machines is not available in State like Harayana)

OR

Machine Dr 140000
Input Excise on Machines 1/2(Cenvat on Capital Goods Current Year) 8750
Input Excise on Machines 1/2 Deffered (Cenvat on Capital Goods Deferred) 8750
Input Vat on Machines 1/3 ( Capital Goods Current Year)2625
Input Vat on Machines 2/3 ( Capital Goods Defered) 5250
                                     To H 165375
(Assuming Input of Vat on Machines is available in State like Delhi where it is available in 3 years 1/3 every year)

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                      I LTD 
ParticularsAmount
Machines(Office)35000
Excise 12.5%4375
Total39375
Vat 5%1968.75
Total41343.75

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Entry

Machine Dr 41343.75
               To I LTD 41343.75
(Since Machine used in office and not for production,no input in this case)

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Sales Finished Goods

                        XLTD 
ParticularsAmount
Sales (Bottles)600000
Excise 12.5%75000
Total675000
Vat 5%33750
Total708750

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Entry

X Dr 708750
          To Sales (Bottles) 600000
          To Output ED (Bottles) 12.5% 75000
          To Output Vat 5% 33750
(For every item manufactured,separate sales and output ed a/c is preferred)

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Sales Scrap

                       Y LTD 
ParticularsAmount
Sales80000
Excise10000
Total90000
Vat 5%4500
Total94500

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Entry

Y Dr 94500
        To Sales (Scrap) 80000
        To Output ED (Scrap) 12.5% 10000
        To Output Vat 5% 4500
(For every item manufactured,separate sales and output ed a/c is preferred)

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ADJUSTMENT ENTRY FOR OUTPUT AND INPUT ED

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OUTPUT ED (Bottles) Dr 75000
OUTPUT ED (Scrap) Dr 10000
              To Input Excise(Cenvat on Inputs) Dr 16000
              To Input Service Tax (Cenvat on Input Services) Dr 8750
              To Input Excise on Machines 1/2(Cenvat on Capital Goods Current Year) 2800
              To ED Payable 57450

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What is Vat Payable?

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Output Vat 5% Der 38250
                To Input Vat 5% Dr 6200
               To Input Vat on Machines 1/3 ( Capital Goods Current Year)2625
               To Vat Payable 32050

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Question:-

Suppose Company had a Balance of 20000 in PLA Account
It Deposited 40000 more
Pass Entries

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PLA DR 40000
        To Bank 40000

(PLA IS A CURRENT ASSET IN TALLY HAVING OPENING BALANCE OF 20000)


ED PAYABLE Dr 57450
To PLA 57450
What is the Balance left after adjusting Excise Duty Payable

(Balance left in PLA=20000+40000-57450=2550)

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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com.
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