Change in Excise Rates

There are changes in excise rates frequently. In most of cases, on hand stock will be at old excise rates. Whenever any stock movement is done, as per system functionality, it will pick latest tax rate. But as per statute, the excise credit must be passed on at the same rate of procurement.

Let me provide an example.

1000 units of RM procured under 4% excise in Feb-10, lying as on hand stock.

On 01-Mar-10, GR makes excise at 8%. Hence all transactions will now be at 8%.

On 02-Mar-2010, an ISO is created to transfer stock to another location. For this ISO, the excise rate will be 8%, but stock was procured at 4%. As per excise rules, this is not allowed since an additional 4% is being passed as credit.