Tax Book 2023

Practice Questions with Solutions Chapter- 06

(Note – 5 ) It has been assumed that credit note issued by supplier U/S 9 of the Sales tax Act is fulfilling the
conditions of Rule 22 of Sales Tax Rules, 2006 that has resulted into decrease in value of taxable supplies.

(Note - 6) No further tax has been charged on supplies covered under Fifth Schedule to the Sales Tax Act,
1990 by virtue of SRO 585(I)/2017, dated: 01/07/2017.

Q.9 Mr. Khan is a registered manufacturer under the Sales Tax Act, 1990. Data regarding his business

for the month of July 20 22 is as follows:

Rs.

1. Taxable turnover to registered persons 350,000


2. Taxable turnover to non-registered persons 140,000


3. Sales to retailers 50,000


4. Supplies to Government hospital (consisting of 30 beds) 150,000


5. Supplies to hospital (run by NPO) 130,000


6. Zero rated supply 45,000


7. Taxable purchases from registered persons 160,000


8. Taxable purchases from non-registered persons 25,000


9. Sales tax paid on electricity bills 10,000

Required: Calculate sales tax payable.

Solution Rs. Rs.

Output tax

On taxable turnover to registered persons U/S (Rs. 350,000 x 17%) 59 , 500

On taxable turnover to non-registered persons U/S (Rs. 140,000 x 1 7 %) 23 , 800

Sales to retailers (Rs. 50,000 x 17%) 8, 500

Supplies to Government / charitable hospital (30 beds) (Rs. 150,000 x 17%) 25,500

Supplies to hospital (rum by NPO exempt under 6 th Schedule)

(Note – 1) 0

Zero rated supplies [U/S 4 read with 5th Schedule] 0

117 , 300

Input tax

On taxable local supplies (working) (A) 29 , 674

90% of output tax (Rs. 117,300 x 90%) (without 3 % further tax) (B) 105 , 570

Less: Admissible input tax: lower of (A) or (B) 29 , 674

Sales tax payable 87 , 626

3 % further sales tax payable on supplies to un-registered persons (Note – 3) 4,2 00

Sales tax refundable for zero rated supplies 1, 935

Working

Taxable purchases from registered persons (Rs.160,000 x 17%) 27 , 200

Taxable purchases from non-registered persons (Note – 3) 0

Sales tax paid on electricity bills 10,000

Total input tax to be apportioned 37 , 200

Apportionment of residual input tax

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

Residual

input tax

Rs. Rs.

Taxable local supplies 690,000 29 , 674

Exempt supplies 130,000 5, 591

Zero rated supplies 45,000 1, 935

865,000 37 , 200