Excise Duty exemption for Pharma Companies


We are small scale pharmaceutical manufacturing (formulations) company situated in rural area in Punjab. Please clarify the following with specific notifications
1) Turnover (sale upto 150 lakhs) for the purpose of excise to be calculated on 65% of MRP or based on actual billing price as per invoices.
2) VAT to be charged on 65% of MRP or actual billing price.
Your clarification on the above subject will highly appreciated.


For turnover upto 150 lakh, there is no excise applicable. Excise is applicable above 150 lakh turnover at manufacturing unit.
1. Excise is applicable to 65% of MRP and calculated as per this.
2. Vat is calculated at actual billing invoice value plus excise duty.

For example:

Your Invoice Value is 40/-
Invoice value as per MRP is 100/-
Excise will be applicable at 65% of mrp i.e. 65/- (Suppose excise duty is 6%) then excise duty will be 65*6%=3.9/-

Now calculate it as per bill:

Amount: 40/-
Excise: 3.9/-
Sub total= 43.9/-
Vat (5%)= 2.20/-
Total value: 46.01/-
Add if any cess, edu cess and other cess or taxes if applicable in it..

Thank you for your reply, but my first question is still unanswered, I am again writing the question.
For calculation of sale (turnover) of 150 lakh upto which excise is exempt which of following is correct
1) Sale as per Invoice or
2) 65 % of MRP of sold products
also specify notification regarding the above which ever is applicable.


Excise of 65% of Mrp is exempted. you can bill at vat (like 5% or 5.25% or which is applicable) on sale as per actual invoice value. You don’t need to add excise mentioned or issue bill under excise in 2) column (65 % of MRP of sold products).

Your Billing will be like:
suppose vat is 5%

Amount: 40/-
Vat (5%)= 2/-
Total value: 42/-

Notification read by clicking here

First it was 1 crore and again it was increased to 1.5 crore 

Hope above information is helpful to you…
For any query and suggestion, mail us at pharmafranchiseehelp@gmail.com
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