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Tax calulation Consignment Sales

Former Member
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Dear Experts,

I have a few queries regarding the taxation concept in consignment sales.

We have executed the consignment sales by fill up and subsequently consignment issue.

The issue is India specifc. Both the delivering plant and customer ( consignee ) are located in same state ( Say Maharashtra)

When the invoices are issued in Consignment issue process, VAT @ 5 % is payable/calculated in invoice. I have a few queries on the same.

: Whether the Consignment should have TAX-CST / VAT. Or is there any specification for the consignment sales since it is a intrastate transaction and what should be tax structure in interstate consignment sales?

: When the consignee has sold the goods and invoiced, the tax have been calculated /collected so when we raise the invoice to our consignee agent, how should we consider the tax for this invoicing?

: What is the main difference ( if any) in taxation setting for consignemnt process.

: How should it be reflected in accounting?

Kindly revert accordingly.

Many thanks in advance.

Accepted Solutions (1)

Accepted Solutions (1)

Former Member
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Dear Dharmendra Kumar

There is no much difference in between normal sales and consignment sale.

Where as in consignment fill up we raise the Performa invoice to the consignee and the taxes will not be collected from him, since the goods are still business owner ship(consignment fill up).

When the goods are sold to the end customer then we raise the commercial invoice, then only taxes will be collected from the consignee.

When in consignment fill up no accounting documnet will be generated.

In consignment issue as accounting entries are Customer-debited, Revenues-credited,Taxes-Credited,Discounts-Debited.

You define relevant tax codes for the respective condition types in FTXP

Please revert if you have any further clarifications

Thanks&Regards

Raghu.k ;

Answers (2)

Answers (2)

Former Member
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Closed

jignesh_mehta3
Active Contributor
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As far as Sales Tax 9VAT & CST) goes, treatment is same as normal sales.

If your Consignee is in same state you will charge VAT in Consignment Issue Invoice.

If your Consignee is in different state you will charge CST in Consignment Issue Invoice.

Similarly Accounting entry will be same as in normal sales.

The only thing different would be Excise Treatment (If applicable in your case). You will have to Create Excise Invoice at time of Consignment Fill-Up as Excisable good are leaving your Plant & pass the Excise Credit to your Consignee.

Hope this helps,

Thanks,

Jignesh Mehta

former_member188076
Active Contributor
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Hi Jignesh

I have a small query - when the RG1 register will be updated? At the time of Consignement Fill-up or at the Time of Consignement Issue?

And what will happen at the time of Return?

Regards,

Amitesh Anand

jignesh_mehta3
Active Contributor
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Hello Amitesh,

Refer the following threads for clarification:

1.

2. http://www.caclubindia.com/forum/rules-of-consignment-sales-36561.asp

Secondly in case of Consignment Returns, How you handle Excise Duty in case of normal stock returns. Same is what you need to do for Consignment Returns. You will have to pass a Excise Adjustment thru T-Code: J1IH.

Hope this clarifies,

Thanks,

Jignesh Mehta

former_member188076
Active Contributor
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Hi Jignesh,

Thanks for your clarification.

Thanks and regards,

Amitesh Anand