Excise Duty and Sales tax on Freight and Insurance

[vikas anand]

Dear All,

If the term of delivery is our ex-factory gate, but we are arranging Insurance and freight charges up to the buyer site. The same we are charging in the Invoice in below the line of Excise Duty & Sales tax amount and reimbursement made by the buyer. Please confirm Excise Duty and Sales tax will attract on Freight and Insurance.

Please be note that the charging of Insurance from buyer is more than we are paying for Insurance companies.

AI Summary

Excise valuation: freight excluded from assessable value for factory-gate removals but included for door delivery, and sales tax depends on contract.
For excise duty, freight is excluded from assessable value when place of removal is factory gate but must be included where the seller delivers to the buyer's premises; insurance reimbursements are treated as reimbursement with any excess recorded as profit. Sales tax is levied on the sale price and applies to freight when it is agreed as part of the sale consideration. Auditors should verify potential service tax or other indirect tax implications of amounts charged for freight and insurance.