Tax Book 2023

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

Value excluding Sales Tax

Sales Tax @

16%

Value including

Sales Tax

Q.NO.8 Spring 2009

Mr.Azadisaregisteredpersonandengagedinthemanufactureofconsumablegoods.ThefollowingforthemonthofFebruary
2023 is available:

970 Conceptual Approach to Taxes

Rupees Rupees Rupees
Sales

• Taxable 6,000,000 960,000 6,960,000


• Exempt 4,000,000 0 4,000,000
  10,000,000 960,000 10,960,000
  Purchases


• Raw materials 9,200,000 1,472,000 10,672,000


• Fixed assets 1,700,000 272,000 1,972,000
  10,900,000 1,744,000 12,644,000

Required: Work out sales tax liability of Mr. Azad along with input tax to be carried forward (if any) in his sales
tax return.

Sales tax liability: Rs. Rs.

Solution
Sales tax liability: Rs. Rs.

Output tax 1,020,000
Input tax against taxable local supplies (Note - 1) (A) 938,400
90% of output tax (Rs.1,020,000 x 90%) (Note - 3) (B) 918,000
Less admissible input tax: lower of (A) or (B) 918,000
Balance sales tax payable 102,000
Input tax on fixed assets ( 289,000 x 6,000,000 / 10,000,000 )
(Restriction of 90% of output tax is not applicable, therefore considered separately) 173,400
Excess input tax paid c/f (71,400)

Sales tax credit carried forward (A) less (B) 20,400

Input tax:
Input tax on raw material 1,564,000
1,564,000 1,564,000
(Note - 1)Apportionment of residual input tax Supplies Residul input
[U/R 25 of the Sales tax Rules, 2006] tax
Rs. Rs.
Taxable local supplies 6,000,000 938,400
Exempt supplies (Note - 2) 4,000,000 625,600
10,000,000 1,564,000
(Note - 2)

(Note - 3)

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

AsthenoneoftheclauseofSRO1190(I)/2019datedOctober02, 2019 isapplicable,therefore90%limitationis

applicable U/S 8B of the Sales Tax Act, 1990.

970 Conceptual Approach to Taxes