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Pay full excise tax on loss product : IT

Mumbai, Apr 17 () : Indian tax officials are now claiming full excise duty on goods that have been sold below the normal price. The new claim is that even if the companies suffered a loss, the excise duty on the assessed value of the product has to be paid.

By underselling the product, the company pays only half the excise duty. The IT officials are opening up this new front to increase revenue collection from companies. Car makers in particular, mostly multinationals are targeted, since many models which are not selling have been sold below the cost price to clear the inventory.

Mercedes Benz, Honda,Ford, Daimler, Suzuki and General Motors are under the lens by IT. The usual practice is that excise duty is levied on the assessed value at which the item is sold. No car maker has so far got any notice on this charge. Already companies with headquarters abroad are facing IT notices for tax evasion. Nokia, Vodafone and Royal Dutch Shell are facing charges worth billions.

A Supreme Court ruling that excises duty should be paid on the market price, even if was sold under it, is the basis on which IT men are moving about. The car industry is facing the worst slowdown in twelve years.

Telecom companies are facing tax cases on share transfer pricing. Though the IT men may arrive at a price for each model and claim taxes, car makers will have their reasons for pricing. The case will open competitive pricing policy of car makers.

Internationally too, the excise duty is paid on the sale deed amount. Sometimes to gain a market share the product is under-priced. Sometimes when a model flops, the car is sold at a loss. These cases if filed could throw up a lengthy battle. Other sectors too battling the slowdown and clearing stocks could find it losing more than the expected.