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Question
In a financial year, the HDFC company purchased floor tiles worth Rs 12,00,000 taxable at 7.5%, sanitary fittings worth Rs 15,00,000 taxable at 10% and glass worth Rs 16,00,000 taxable at 6%. In the same period, the company sold floor tiles worth Rs 28,00,000, sanitary fittings worth Rs 36,00,000 and glass worth Rs 15,00,000. Due to manufacturing defects, floor tiles worth Rs 2,00,000 and glass worth Rs 1,50,000 were returned by the company. Calculate the tax liability of the company for this period.
Solution
For Floor Tiles:
Total purchasing amount =cost of tiles - cost of defective tiles
= Rs ( 12,00,000 - 2,00,000)
= Rs 10,00,000
Tax on purchase = 7.5 % of Rs 10,00,000 ·
`= 7.5/100 xx "Rs" 1000000`
= Rs 75000
Tax on purchase = 7 .5 % of Rs 1000000
`= 7.5/100 xx "Rs" 2800000`
= Rs 210000
Total tax = tax on sale - tax on purchase
=Rs (2, 10,000 - 75,000)
= Rs 1,35,000
For Sanitary fittings :
Tax on purchase = 10 % of Rs 15,00,000
`= 10/100 xx "Rs" 1500000`
= Rs 1,50,000
Tax on sale = 10 % of Rs 36,00,000
`= 10/100 xx "Rs" 3600000`
= Rs 3,60,000
Total tax = tax on sale - tax on purchase
= Rs (3,60,000 - 1,50,000)
= 210000
For Glass:
Total purchasing amount = cost of glass - oost of defective glass
= Rs (16,00,000 - 1,50,000)
= Rs 14,50,000
Tax on purchase = 6 % of Rs 14,50,000
`= 6/100 xx "Rs" 1450000`
= Rs 87000
Tax on sale = 6 % of Rs 15,00,000
`= 6/100 xx "Rs" 1500000`
= Rs 90,000
Total tax = tax on sale - tax on purchase
=Rs (90,000 - 87,000)
=Rs 3,000
Total tax liability = Tax on floor tile + tax on sanitary fittings + tax on glass
= Rs (1,35,000 + 2, 10,000 + 3,000)
= Rs 3,48,000
Hence, Total liability of HDFC =Rs 3,48,000
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