Tax Book 2023

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

Star Enterprises has submitted the following data for the month of March 2023
Rupees
Total Sales-registered 1,000,000
Total Sales-Unregistered 5,000,000
Export Sales 2,500,000
Exempt Supplies 500,000
Gross Purchases-from Registered suppliers 6,500,000
Gross Purchases-from Unregistered suppliers 500,000
Purchase Return-to Registered suppliers 650,000

Q. NO. 9 Spring 2003

974 Conceptual Approach to Taxes

Purchase Return-to Registered suppliers 650,000
Required: You are required to compute sales tax liability of Star Enterprises for the month of March 2023.

Sales tax liability: Sales tax
Rs. Rs.
Output tax U/S 3 (Rs. 6,000,000 x 17%) (Note - 4 & 6) 1,020,000
Input tax against taxable local supplies (Note - 1) (A) 663,000
90% of output tax (Rs.1,120,000 x 90%) (B) 918,000
Less admissible input tax: lower of (A) or (B) 663,000
Balance sales tax payable 357,000

Sales tax refundable against exports u/s 10(1) (Note - 1) 276,250

Solution

Input tax:
On taxable supplies (Rs. 6,500,000 x 17%) 1,105,000
Less: Sales tax on purchase returns [U/S 9 read with Rule 22] (Rs. 650,000 x 17%) 110,500
994,500
(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 6,000,000 663,000
Exports 2,500,000 276,250
Exempt supplies (Note - 3) 500,000 55,250
9,000,000 994,500
(Note - 2)Asthezeroratedsuppliesarelessthan50%ofalltaxablesuppliesunderSRO1190(I)/2019datedOctober02,2019,
therefore 90% limitation is applicable U/S 8B of the Sales Tax Act, 1990.
(Note - 3)

(Note - 4)

(Note- 5)

therefore 90% limitation is applicable U/S 8B of the Sales Tax Act, 1990.

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

NofurthertaxhasbeenchargedonsuppliescoveredunderFifthScheduletotheSalesTaxAct, 1990 byvirtueofSRO

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

(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.

Ithasbeenassumedthat3%furthertaxu/s3(1A)isnotapplicableonlocaltaxablesuppliestounregisteredpersons

underSRO648(I)/2013datedJuly09, 2013 otherwisefurthertaxshallbeaccountedforandpaidseperatelywithout

adjustmentofthesameagainstinputtax/refundoftheregisteredpersonandfurtheritshallalsonotbeconsideredfor

the computation of 90% limitation on output tax.

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

974 Conceptual Approach to Taxes