Assessable Value
Assessable value is the value for that a percentage of duty is payable to the central excise tax authorities. In general, the assessable value is the price on the bill or the invoice.
Calculating Assessable Value
You can calculate assessable value by using the following:
Maximum Retail Price (MRP)
Price Inclusive of Tax (PIT)
Maximum Retail Price
The Central Excise Act defines the retail sale price as the maximum price at which the excisable goods in packaged form can be sold to the consumer. The maximum retail price must include all taxes, packing charges, freight forwarding charges, delivery charges, commissions payable to dealers, advertisement charges, and other charges as needed. You can calculate the excise tax based on the maximum retail price minus the abatement percentage.
Price Inclusive of Tax
A manufacturer may have an agreement with a customer regarding the selling price of goods, which includes all taxes and charges. The manufacturer must calculate the excise tax and the VAT or Central Sales Tax (CST) charges by using reverse calculations. The manufacturer must pay the excise tax and the VAT or CST to the tax authorities. When the goods are covered by the maximum retail price provision of the Central Excise Act, the selling price to the customer is the price inclusive of all taxes.
You can create a sales order or an invoice for the price inclusive of tax. The sales order includes five lines; three of these lines include the price inclusive of tax. All tax components are calculated by making reverse calculations for the entries that include the price inclusive of tax.
See Also
Tasks
How to: Set Up Excise Tax for Maximum Retail Price
How to: Calculate Excise Tax for Maximum Retail Price Using Sales Documents
How to: Calculate Excise Tax for Maximum Retail Price Using Transfer Orders
How to: Set Up Price Inclusive of Tax