Tax Book 2023

Chapter 12 Solved Past Papers Sales Tax Numericals of ICMAP Stage IV - (2003 to 2018)

Local taxable supplies to registered persons 72,870,000

Local taxable supplies to un-registered persons 9,850,000

Exports to Canada and USA 12,700,000

Following additional information is also available:

(i) A new machine purchased for Rs. 12 million was commissioned into operations during

February 2022.

(v) Sales tax credit brought forward from previous month amounted to Rs. 910,500.

(iv) An amount of Rs. 820,000 on account of purchases made from a registered supplier is outstanding

since July 2022. The related input tax was accounted for in the relevant tax period.

(ii) Sub-standard supplies amounting to Rs. 4,500,000 were returned to vendors. Proper debit/credit

notes were raised in this regard.

(iii) Goods worth Rs. 7,200,000 were returned by different customers. Proper debit/credit notes were

raised within the specified period.

Conceptual Approach to Taxes____1035

Sales tax is payable at the rate of 17%. All the above figures are exclusive of sales tax.

Required:

Compute sales tax payable/refundable and input tax credit to be carried forward, if any.

Solution:

Mr. Folad

Computation of sales tax liability

Rs. Rs.

Output tax:

On local taxable supplies to registered persons U/S 3 12,387,900

On local taxable supplies to unregistered persons U/S 3 (Note 4) 1,674,500

On exports to Canada and USA [U/S 4 read with 5th Schedule]

Less sales returns (1,224,000)

12,838,400

Input tax:

On net local supples from registered persons (Note 2) less 7,351,347

related to fixed assets (Rs.9,119,832 - Rs. 1,768,485)

On purchases from un- registered persons -

Input tax b/f 910,500

(A)(A) 8,261,8478,261,847

90% of output tax (N - 1) (B) 11,554,560

Less: Admissible input tax Lower of (A) or (B) 8,261,847

Purchase of fixed asset related to local taxable supplies 1,768,485

(Rs. 2,040,000 / 95,420,000 x 82,720,000) (N - 1)

(C) 10,030,332

Balance sales tax payable [ Output tax - (C) ] 2,808,068

(N - 3) 295,500

3% further sales tax payable on supplies to un-registered persons

Conceptual Approach to Taxes____1035