Skip to content

CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Indirect Tax Laws

Case: Kaveri Precision Tools Ltd also pays its German supplier a separate, documented royalty of Rs 3,00,000 for patented technology embedded in the machine; payment is a condition of sale. The machine's value including freight and insurance is Rs 47,25,000. Basic customs duty (BCD) is 10% and Social Welfare Surcharge is 10% of BCD. What is the BCD plus SWS payable?

Royalty that is a condition of sale is added to the transaction value. Assessable value becomes Rs 50,25,000, BCD at 10% is Rs 5,02,500, and SWS of 10% of BCD adds Rs 50,250, giving Rs 5,52,750 payable.

  1. ARs 5,02,500
  2. BRs 5,52,750Correct
  3. CRs 5,22,500
  4. DRs 4,72,500

Explanation

Royalty paid as a condition of sale is added to the transaction value. Assessable value = 47,25,000 + 3,00,000 = Rs 50,25,000. BCD at 10% = 5,02,500. SWS at 10% of BCD = 50,250. Total = Rs 5,52,750. Rs 5,02,500 omits SWS; Rs 4,72,500 omits royalty.

Did you get it right without looking?

One question tells you little. A timed set on Indirect Tax Laws shows your real accuracy, how long you take and where you lose marks.

Practise Indirect Tax LawsFree diagnostic mock

More Indirect Tax Laws questions