Tax Book 2023

Chapter 12 Solved Past Papers Sales Tax Numericals of ICMAP Stage IV - (2003 to 2016)

Answer 5(a) Spring 2017

Kamran Limited (KL)

Computation of Sales Tax Liability

For the month of June 2023

Rupees

Notes

Out put tax:

510,000

Export of commercial imports - Hair Serum -

N -1 153,000

663,000

Less: Input tax

153,000

N -2 564,706

Total input tax 717,706

Sales tax paid on commercial imports - Hair Serum

Local supply of commercial imports - Hair Serum

Local Sales - Toothpaste (6,000 packs x Rs. 150

per pack x 17% )

Sales tax on purchases of Toothpaste (6,000 packs x

Rs. 150 per pack x 17%)

1024___Conceptual Approach to Taxes

Total input tax 717,706

Excess input tax on commercial import (this can not be claimed as refund) 54,707

Sales tax on lunch and entertainment of employees N-3 -

Input tax on plant and equipment 1,200,000

Excess input tax (including Rs. 54,707 on commercial imports

that can not be claimed as refund) 1,254,707

Notes:

N-2: Apportonment of input Tax on import to Local Suppliers:

Sales tax paid on commercial imports [Hair Serum] x local supply [Hair Surum]

Export [Hair Serum] + Local supply [ Hair Serum]

Rupees

Sales tax paid on commercial imports - Hair Serum

(8,000 boxes x Rs. 500 per box x 20%) 800,000

Export to Vietnam (500 boxes x Rs. 2,500 per box) 1,250,000

Local sales (5,000 boxes x Rs. 600 per box) 3,000,000

Total sales of commercial imports - Hair Serum 4,250,000

Apportioned input tax related to local supplies = Rs.800,000 x Rs. 3,000,000

N-1: Being Third Schedule item, manufacturer would have chaged sales tax

Apportioned input tax related to local supplies = Rs.800,000 x Rs. 3,000,000

Rs.4,250,000

N-3: Sales Tax on Lunch and Entertainment:

Sales tax on Rs. 60,000 paid on dinner and entertainment for the company's employees is not an

admissible tax credit.

1024___Conceptual Approach to Taxes