CMA Intermediate · Direct and Indirect Taxation · Concept of Indirect Taxes
Goods valued at Rs 80,000 attract an ad valorem duty of 10%, and a separate specific duty of Rs 5 per unit applies to 400 units of the same goods. If both duties are levied together, what is the total duty?
The total duty is Rs 10,000. The ad valorem component is 10% of Rs 80,000, which is Rs 8,000, and the specific component is 400 units at Rs 5, which is Rs 2,000. Adding both gives Rs 10,000.
- ARs 8,000
- BRs 2,000
- CRs 10,000Correct
- DRs 12,000
Explanation
Ad valorem duty = 10% x 80,000 = Rs 8,000. Specific duty = 400 x Rs 5 = Rs 2,000. Total = Rs 10,000. Option A omits the specific duty and option B omits the ad valorem duty.
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