Question

MODVAT is related to
A) Sales Tax
B) Income Tax
C) Wealth Tax
D) Excise Tax

Answer 1

MODVAT is related to Exercise Tax

Answer 2

MODVAT is related to Excise Tax.

So D) Excise Tax is the right answer.

MODVAT or modified value added tax is related to the excise duty and manufacturers of excisable goods can avail their credit of duty paid under these central excise rules.

Manufacturers can utilize such credit to manage their liability or they can remove their final goods by this tax system.

The MODVAT tax system was announced in 1986 and this scheme has been extended for the petroleum goods.