The Cenvat scheme is principally based on system of
granting credit of duty paid on inputs and input services.
A manufacturer or service provider has to pay excise duty
and service tax as per normal procedure on the basis
of ‘Assessable Value’ (which is mainly based on selling
price). However, he gets credit of duty paid on inputs and
service tax paid on input services. Thus, he actually pays
amount equal to duty/service tax as shown in invoice less
the Cenvat credit available to him.
cenvat credit as well as service tax is paid on the products
manufactured and services provided. the tax paid on inputs,
raw materials, capital goods and input services- utilized in
manufacture of final products of a manufacturer and services
provided are allowed to be deducted/ allowed as credit
against the central excise/ service tax liability of a
manufacturer/ service provided. the scheme was introduced
for avoiding multi level taxation on same product or
service, also called cascading effect.
As regards exports, central excise duty is nil. duty
drawback is paid by govt. to exporters.
Cenvat is based on destination principle i.e. excise
duty/service tax is paid only when goods are consumed. Till
then, burden of duty gets passed on to the next
buyer/customer In case of sales tax, as per this principle,
sales tax is payable in the State in which goods are
consumed and not in the State in which goods are produced
Cenvat credit is a scheme where the manufactures or the
output services provides are allowed a set off of the taxes
paid on the inputs or the inputs services that are used
while Manufacturing the final products or providing the
X draws a bill on Y for Rs 20,000 for 3 months on 1.1.05.
The bill is discounted with
banker at a charge of Rs 100. At maturity the bill return
dishonoured. In the books of X,
for dishonour, the bank account will be credited by Rs.
On January 20x2, the balances of ABC Ltd's provision of
doubtful debt account was $1510. During the year, a total of
3750 of account recievable was written of as bad debts. The
balance in the provision for doubtful debts account at 31st
Dec was 1450.
What is the total amount of bad debt recognised this year?
How can I pass the journal entry for work in progress for a
construction company for every end of the period and what
should be for next period? I would like to know the debit
and credit should allocated where in an accounting system?