Tax Book 2023

Practice Questions with Solutions Chapter- 06

(Sales tax registration number is printed on bills)

10 Sales tax paid on telephone bills 8,500

(Sales tax registration number is printed on bills)

Required: Calculate sales tax payable.

Solution

Output tax Rupees

On taxable turnover to registered persons U/S 3 (Rs. 400,000 x 17%) 68 ,000

On taxable turnover to non-registered persons U/S 3 (Rs. 150,000 x 1 7 %) 25 , 500

On supplies to DTRE registered persons [U/S 4 read with 5 th

Schedule] 0

On zero rates supplies [U/S 4 read with 5th

Schedule] 0

On debit note issue in respect of sales (Rs. 20,000 x 17%) (Note – 4 ) 3, 400

On credit note issue in respect of sales U/R (Rs. 50,000 x 17%) (Note – 5 ) (8, 500 )

88 , 400

Input tax

On local supplies (A)

52,317

90% of output tax (Rs. 88,400 x 90%) (without 3 % further tax) (B)

79 , 560

Less: Admissible input tax: lower of (A) or (B)

52 , 317

Sales tax payable 36 , 083

3 % further sales tax payable on supplies to un-registered persons (Note – 3) 4 , 500

Sales tax refundable in respect of zero rated supplies & DTRE supplies

(Rs.4,280 + Rs. 1,903) 6 , 183

Note-1:

Taxable purchases from registered persons (Rs. 250,000 x 17%) 42 , 500

Sales tax paid on electricity bills 7,500

Sales tax paid on telephone bills 8,500

Total input tax to be apportioned

58 , 500

Apportionment of taxable supplies input tax

[U/R 25 of the Sales Tax Rules, 2006] Supplies Input tax

Rs. Rs.

Local supplies 550,000 52 , 317

Supplies related to DTRE and zero rated 65 ,000 6 , 183

615,000 58 , 500

(Note- 2) As the zero rated supplies (including sales to DTRE registered persons) are less than 50% of all
taxable supplies under SRO 1190(I)/2019 dated October 02, 2019, therefore 90% limitation is applicable
U/S 8B of the Sales Tax Act, 1990.

(Note – 3) It has been assumed that 3 % further tax is applicable on local taxable supplies to unregistered
persons and the same shall be accounted for and paid separately without adjustment of the same against
input tax / refund of the registered person and further it shall also not be considered for the computation of
90% limitation on output tax.

(Note – 4 ) It has been assumed that debit note issued by supplier of the Sales tax Act is fulfilling the
conditions of Rule 22 of Sales Tax Rules, 2006 that has resulted into increase in value of taxable supplies.