BIR Ruling

October 1, 1968 Mr. Eduardo D. Esteves Salisay District Dagupan City S i r : This refers to your letter dated July 12, 1968 requesting information as to the deductible raw materials of your client who is engaged in the business of manufacturing concrete products. In reply, thereto, I have the honor to inform you as follows: The rule is, only the cost of raw materials which is subject to tax under the same section to which the finished product is subject can be deducted from the gross selling price of the finished product. Hence, the cost of sand, gravel, galvanized iron wire, and cement used in the manufacture of cement products is deductible from the gross selling price of the finished concrete products, both raw material and finished products being subject to the same rate of tax, provided that such cost is duly established by the corresponding sales invoices of the sellers thereof, and provided further that the corresponding sales invoices indicate the rate of tax to which the raw materials were subjected pursuant to Section 6 of Revenue Regulations No. 3-64, as amended by Revenue Regulations No. 5-65. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue