Tax Book 2023

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

Rs. in ‘000 Rs. in ‘000

Taxable Value Sales Tax

Sales Tax Credit (Input Tax)

Local purchases:
− From registered persons (Rs. 15.0 m – Rs. 3.0 m)  12,000 2,040
− From un-registered persons            (Note - 5) 8,000 -
Fixed assets (Machinery) (Note - 2) 2,400 408

Solution

966 Conceptual Approach to Taxes

Fixed assets (Machinery) (Note - 2) 2,400 408
Courier charges (Not admissible being not related to production / purchases) 20 -

Input tax attributable to both taxable and exempt goods 2,448
Less: Inadmissible / un-adjustable input tax (Note - 1) (1,174)
Input tax for the month 1,274
Add previous month credit brought forward 50
Accumulated credit 1,324

Sales Tax Debit (output tax)

Domestic supplies of manufactured goods:
− to registered persons  U/S 3 10,000 1,700
− to unregistered persons  U/S 3 (Note - 2 & 7) 3,000 510
− Export to Taiwan  [U/S 4 read with 5th Schedule] 10,000 -
− Exempt goods     [U/S 13 read with 6th Schedule] 2,000 -
Parts provided to the CEO U/S 3Parts provided to the CEO U/S 3 15 15 33
Output tax for the month 2,213

Less: Sales return [U/S 9 read with Rule 22] 500 85
Debit for the month 2,128

On local supplies [Rs. 1,324 - Rs. 212 (408/ 25,015 x 13,015)] (A) 1,112
90% of output tax (Rs. 2,128 x 90%) = (B) 1,915

Less: Admissible input tax: lower of (A) or (B) 1,112
Input portion related to fixed assets used on taxable supplies without 90% limitation 212
Balance sales tax payable 804

Sales tax refund on export sales U/S 10(1) (Note - 1) 979

(Note - 1)(Note - 1)Apportionment of residaul input taxApportionment of residaul input tax

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

Rs. in ‘000

Total residual input tax 2,448

Allocation of residual input tax

[U/S 25 of the Sales Tax Rules, 2006] Residual input tax

Rs. Rs.

Taxable supplies 13,015 1,274

Exempt supplies (Note - 4) 2,000 196

Zero rated supplies 10,000 979

25,015 2,448

(Note - 2)Asthezeroratedsuppliesarelessthan50%ofalltaxablesuppliesunderSRO1190(I)/2019datedOctober02,2019,

therefore90%limitationisapplicableU/S8BoftheSalesTaxAct,1990.Thesaidlimitationisnotapplicableoninputtax

(Note - 3)

(Note - 4)

(Note - 5)

(Note- 6)

Aspurchasesfromnon-registeredpersonsarewithoutsalestaxinvoiceshencethesameshallbewithoutsalestaxu/s

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

Ithasbeenassumedthat3%furthertaxu/s3(1A)isnotapplicableonlocaltaxablesuppliestounregisteredpersons

underSRO648(I)/2013datedJuly09, 2013 otherwisefurthertaxshallbeaccountedforandpaidseperatelywithout

adjustmentofthesameagainstinputtax/refundoftheregisteredpersonandfurtheritshallalsonotbeconsideredfor

the computation of 90% limitation on output tax.

NofurthertaxhasbeenchargedonsuppliescoveredunderFifthScheduletotheSalesTaxAct, 1990 byvirtueofSRO

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

therefore90%limitationisapplicableU/S8BoftheSalesTaxAct,1990.Thesaidlimitationisnotapplicableoninputtax

paid on acquistion of fixed assets.

A registeed person is not entitled to claim input tax attirbutable to exempt supplies U/S 8(2) of the Sales Tax Act, 1990.

(Note -8)

90% restriction u/s 8B on input tax in case of a company is applicable subject to restriction, limitations and conditions of

the Sales Tax Act, 1990.

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

(Note - 7) 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.

966 Conceptual Approach to Taxes