In this lesson we know about Rate Abatement in Tally.ERP9. Lots of Business take Rate Abatement Effect on Service Tax, Excise Duties etc. But 1st we know about rate abatement. A small definition of rate abatement as follows.
Abatement refers to a reprieve from or reduction in a debt, tax or other payment obligation faced by an individual or company. The most common form of abatement is tax abatement. Tax abatement is also an incentive utilized by cities to encourage the redevelopment of distressed areas by providing real property tax abatement and eminent domain. Another type of abatement is that related to the payment of rent. If a building is destroyed by fire, water damage or another accident, a renter is usually granted abatement from making rental payments. A lesser known form of abatement is penalty abatement, commonly associated with the Internal Revenue Service (IRS). Penalty abatement can help an individual or business reduce or eliminate an IRS penalty and/or interest. To request penalty abatement from the IRS, certain requirements must be met. For example, penalty abatement might be granted if a business or individual is able to prove reasonable cause as to why they were unable to meet their tax obligations.
Basically Rate Abatement is applicable on MRP Based Invoices, Abatement effect on only MRP Value & Excise Duty. So What is the calculation of rate abatement, here it is. Let example start with a excise invoice,
A Mobile phone amount is Rs. 10200.00 but MRP Base rate is Rs. 9300. Total Quantity 250 Nos., So the formula is = MRP * 30% = AMOUNT - MRP (9300 * 30% = 2790, THEN 9300 - 2790 = 6510)
I.E. Total Quantity * MRP After Abatement = (250 * 6510 = 1627500), Excise duty will applied on Rs. 1627500-00 + 2% Education Cess %, 1% Secondary Edu Cess + Output Vat / CST.
Total MRP Amount = 1627500-00
Excise Duty @ 12% = 195300-00
Education Cess @ 2% = 3906-00
Secondary Edu Cess @ 1% = 1954-00
Output Vat @ 12.5% = 343896-00 (Output VAT / CST is not effect on abatement)
Following videos shows you how to take abatement in Tally.erp9
Part - 1
Part-2
