Tax Book 2023

Practice Questions with Solutions Chapter- 06

Total taxable local supplies 482,483 34 , 956

Supplies related to DTRE and zero rated 800,778 58,018

1,283,261 92,975

Note: Limitation of 90% of output tax U/S 8B shall not be applicable because of fulfillment of the following
two conditions under SRO 1190(I)/2019 dated October 02, 201 9.

1. Commercial imports are more than 50% of total taxable purchases.


2. Zero rated supplies (including sales to DTRE registered persons) are more than 50% of all taxable
   supplies.
   Although input sales tax credit is available with the registered person to be considered for 90%
   limitation but where no such limitation is applied the same shall be fully adjusted against the ultimate
   sales tax liability of the person. The unadjusted balance of sales tax if any shall be carried forward for
   future adjustment.


3. It has been assumed that 3 % further tax u/s 3(1A) is not applicable on local taxable supplies to
   unregistered persons by virtue of by virtue of serial 5 of SRO 648(I)/2013 dated July 09, 2013
   otherwise further tax shall be accounted for and paid separately without adjustment of the same
   against input tax / refund of the registered person and further it shall also not be considered for the
   computation of 90% limitation on output tax.


4. A registered person is not entitled to claim or deduct the input tax paid on gas and electricity bills that
   are not being the direct constituent and integral part of the taxable goods produced, manufactured or
   supplied during the course or in the furtherance of any taxable activity under section 8 of the Sales
   Tax Act, 1990.


5. 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.

Q.1 2 Mr. Bilal Idrees is a registered manufacturer under the Sales Tax Act, 1990. Data regarding his

business is given below:

Rs.

1 Taxable supplies to registered person 500,000

2 Taxable supplies to non-registered person 180,000

3 Sales to retailers 50,000

4 Supplies donated to recognized institution 15,000

5 Taxable purchases from registered person 220,000

6 Taxable purchases from non-registered person 190,000

7 Purchased raw material (used on taxable and exempt supplies) 200,000

8 Sales tax paid on PTCL dues 6,000

9 Sales tax paid on factory electricity bills 5,000

Note: Sales tax registration number is printed on utility bills.

Required: Calculate his sales tax liability for the month of September 20 22.

Solution

Rs.

Output tax

On taxable supplies to registered person U/S 3 (Rs. 500,000 x 17%) 85 ,0 00

On taxable supplies to non-registered person U/S 3(Rs. 180,000 x 17%) (Note - 2) 30 , 600

Sales to retailers U/S 3 (Rs. 50,000 x 17%) 8, 500

Supplies donated to recognized institution (Exempt under 6th Schedule) 0

124 , 100