Tax Book 2023

Chapter 07 Solved Past Papers Sales Tax Numericals of CA Module C

Sales tax
Output tax Rs. Rs.

Local taxable supplies to registered persons U/S 3 26,860,000 4,566,200

Local taxable supplies to unregistered persons (Note - 2 & 5) 3,550,000 603,500

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

Zero rated supplies - export [U/S 4 read with 5th Schedule] 1,250,000 -

Exports to Malaysia [U/S 4 read with 5th Schedule] 15,000,000 -

Total output tax 5,169,700

Solution

962 Conceptual Approach to Taxes

Total output tax 5,169,700
Less sales returns [U/S 9 read with Rule 22] 1,300,000 (221,000)
4,948,700
Input tax
Input tax apportioned to local taxable supplies (Working given) 4,818,479
Add sales tax credit brought forward 410,000
Total input (A) 5,228,479
90% of output tax (N - 1) (Rs. 4948,700 x 17%] (B) 4,453,830
Less: Admissible input tax: lower of (A) or (B) 4,453,830
Input tax on fixed assets (30,410,000 / 46,660,000 x 510,000) 332,385
Sales tax payable 162,485
3% further sales tax on supplies to un-registered persons (N - 2) 106,500

Input to be carried forward [(A) without fixed assets admissible input - (B)]
[Rs.4,896,094 - Rs.4,453,830][Rs.4,896,094 - Rs.4,453,830] 442,264442,264

Sales tax refundable in respect of exports U/S 10(1) (Working attached) 2,574,821

Input tax to be apportioned:
Purchases from registered persons
(Rs. 40,550,000 - Rs.60,000 = 40,490,000) x 17% 6,883,300
Purchases from unregistered persons [Rs. 5,000,000] (N - 3) -
Fixed assets (machine) [Rs. 3,000,000 x 17%] = (N - 1) 510,000
Total input tax to be apportioned 7,393,300

Apportionment of input tax of taxable supplies Supplies Input tax
[U/R 25 of the Sales Tax Rules, 2006] Rs. Rs.

Local suppliesLocal supplies AllowableAllowable 30,410,00030,410,000 4,818,4794,818,479

Zero rated Refundable 16,250,000 2,574,821

46,660,000 7,393,300

(Note - 1)

(Note - 2)

(Note - 3)

Ithasbeenassumedthat3%furthertaxu/s3(1A)applicableonlocaltaxablesuppliestounregisteredpersonsunder

SRO648(I)/2013datedJuly09, 2013 hencefurthertaxshallbeaccountedforandpaidseperatelywithoutadjustmentof

thesameagainstinputtax/refundoftheregisteredpersonandfurtheritshallalsonotbeconsideredforthecomputation

of 90% limitation on output tax.

Asthezeroratedsuppliesarelessthan50%ofalltaxablesuppliesunderSRO1190(I)/2019datedOctober02, 2019

therefore90%limitationisapplicableU/S8BoftheSalesTaxAct,1990.Thesaidlimitationisnotapplicableoninputtax

paid on acquistion of fixed assets.

Aspurchasesfromnon-registeredpersonsarewithoutsalestaxinvoiceshencethesameshallbewithoutsalestaxu/s

23(2) of the Sales Tax Act, 1990, therefore the question of adjustment of input tax is not applicable.

(Note- 4)

(Note - 6) Assumed that supplies invoices to un registered persons have NTN or CNIC of recipients, as applicable only

on distributors otherwise proportionate input tax shall be disallowed under section 8(1)(m) of the Sales Tax Act, 1990.

NofurthertaxhasbeenchargedonsuppliescoveredunderFifthScheduletotheSalesTaxAct, 1990 byvirtueofSRO

585(I)/2017, Dated: 01/07/2017.

962 Conceptual Approach to Taxes