Tax Book 2023

Chapter 12 Solved Past Papers Sales Tax Numericals of ICMAP Stage IV - (2003 to 2016)

Supplies to: Amount Input Tax

Registered person 1,400,000 90,272

Un-registered person 600,000 38,688

Exempted Supplies 400,000 25,792

Exports 220,000 14,186

2,620,000 168,938

Note 1

Note 2

(Note - 3) 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.

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.

As the registered person given in this question is engaged in manufacturing, import and export

of chemical products and none of the clause under SRO 1190(I)/2019 dated October 02, 2019.

is applicable therefore 90% of output tax limitation on input is applicable U/S 8B of the Sales

Tax Act, 1990. However the same has not been shown as the available input tax is already less

than 90% of the total output tax.

1028___Conceptual Approach to Taxes

Note 3

·         SM made purchases amounting Rs. 800,000 from Elahi & Sons who is registered person.

·         Mr. Ahsan invoiced Rs. 150,000 to SM without charging any sales tax. 

·         SM further incurred manufacturing and other cost amounting Rs. 150,000. 

·         SM also paid sales tax on electricity  bill amounting Rs. 18,000. 

Required:

Compute sales tax liability of SM under the Sales Tax Act, 1990 for the month of June, 2023.

Solution

Sitara Manufacturing

NTN #

8(1)(m) of the Sales Tax Act, 1990.

Q.NO.5(b)August 2014 SitaraManufacturers(SM)dealsinthetaxableandexemptedsupplies.SM

provided following information for determination of its sales tax liability for the month of June, 2023.

·         Out of total stock, SM supplied goods of worth Rs. 1,500,000 to Sidra & Co., which is a registered 

company under the Sales Tax Ac t, 1990.

·        InadditiontoaboveSMmadeexemptedsuppliesofRs.600,000andsuppliedgoodsofworthRs.

500,000 to non-registered person.

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.

Sitara Manufacturing

NTN #

STRN #

Computation of Sales tax payable / refundable

For the month of June 2023

Rupees Rupees

Output tax

Sales to registered person 1,500,000 255,000

Sales to un-registered person 500,000 85,000

Exempt supplies 600,000 -

340,000

Input tax

1028___Conceptual Approach to Taxes