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What is ModVat? |
Vat Include MODVAT refers to an excise duty scheme introduced in 1986 for allowing relief to final manufacturers on the excise duty borne by their suppliers for goods manufactured by them. It has now been replaced by the CENVAT scheme.It applies to certain specific items and is meant to limit the cascading effect of duty incidence on a number of goods where the MODVAT credit can be claimed on the purchase of raw materials on which excise has been paid. This MODVAT credit can be used to set off the excise duty payable on subsequent manufacture of goods. Source(s): http://www3.estart.com/india/finance/bud... MODVAT: refers to an excise duty scheme introduced in 1986 for allowing relief to final manufacturers on the excise duty borne by their suppliers for goods manufactured by them. It has now been replaced by the CENVAT scheme.It applies to certain specific items and is meant to limit the cascading effect of duty incidence on a number of goods where the MODVAT credit can be claimed on the purchase of raw materials on which excise has been paid. This MODVAT credit can be used to set off the excise duty payable on subsequent manufacture of goods. http://www3.estart.com/india/finance/bud... MODVAT can be understood from following example Suppose you are manufacturer of FANS. For this you may require to purchase following inputs Blades Copper Wires etc. When you purchase, these raw materials , you will have to pay excise duties on those items When , you finally produce FANS, the Govt again impose EXCISE duty,so there is double taxation. To overcome such anomaly, the govt framed MODVAT rules under which it returns by giving CREDIT to manufacture re ,the excise duty on the raw materials--in this case Bade,Copper , wires etc. This is modvat rule. That is Govt only taxes the additional value of the G\manufactured products. |
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