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.

Answer 1

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