Tax Book 2023

Practice Questions with Solutions Chapter- 06

Required: Calculate sales tax payable.

Solution

Rs.

Output tax

On taxable turnover to registered persons (Rs. 3,500,000 x 17%) 595,000

On taxable supplies to non-registered persons (Rs. 250,000 x 17 / 117) (Note - 2) 36 , 325

On supplies to retailers (Rs. 150,000 x 17%) 25 , 500

Supplies to DTRE registered persons (U/S 4 read with 5th Schedule) 0

On zero rated supplies (U/S 4 read with 5th Schedule) 0

On exempted supplies (U/S 13 read with 6th Schedule) 0

On supplies made for personal use (Rs.120,000 x 17 / 117) 17 , 436

674 , 261

Input tax

On local supplies (Working attached) 116 , 248

Previous months credit 20,000

(A) 136 , 248

90% of output (Note - 1) (B) 606 , 349

Less: Admissible input tax: lower of (A) or (B) 136 , 248

Sales tax payable 538 , 013

Sale tax refundable in respect of zero rated supplies / DTRE supplies

Working

attached 39 , 114

Working

Taxable purchases from registered on credit basis (Rs. 300,000 x 17%) 51,000

Exempted purchases 0

Imported goods (Rs. 150,000 x 17%) 25 , 500

Acquisition of fixed assets purchased from non-registered persons (Note – 3) 0

Sales tax paid on gas bill consumed in residential colonies (Note – 4) 0

Sales tax paid on factory electricity bills 50,000

Sales tax paid on factory telephone bills 50,000

Total input tax to be apportioned 176 , 500

Apportionment of residual input tax

[U/R 25 of the Sales Tax Rules, 2006] Supplies

Residual

input tax

Rs. Rs.

Local taxable supplies (Rs.3,900,000 – Sales tax Rs. 36 , 325 ) 3, 863 , 675

Total taxable local supplies 3,863,675 116 , 248

Exempted sales [Rs.600,000 + (120,000 x 100/177)] (including

supplies for personal use) 702 , 564 21 , 138

Supplies related to DTRE and zero rated 1,300,000 39,114

5, 866 , 239 176 , 500

Notes:

1. As the zero rated supplies (including sales to DTRE registered persons) are less than 50% of all
   taxable supplies under SRO 1190(I)/2019 dated October 02, 2019, therefore 90% limitation is
   applicable U/S 8B of the Sales Tax Act, 1990.


2. 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.