Tax Book 2023

Chapter 07 Solved Past Papers Sales Tax Numericals of CA Mod- C

Cyma Associates (CA) is registered under the Sales Tax Act, 1990, as manufacturer-cum-distributor-cum-retailer.
Following information has been extracted from its records for the month of August 2022:

Taxable goods to registered persons

Taxable goods to unregistered persons

Exports

Exempt supplies

Supplies

15,000,000

2,800,000

1,500,000

1,700,000

Q. No. 6 September 2017

Rupees

Conceptual Approach to Taxes___ _947

Exempt supplies

Purchases

Taxable goods from registered suppliers

Taxable goods from unregistered suppliers

Exempt goods from registered suppliers

Fixed assets (machinery) from a registered supplier

The following additional information is available for August 2022:

20,000,000

On 1 August 2022, CA launched ‘Halloween Tooth Brush’ which is covered under 3rd schedule. The retail price of the tooth brushes
is Rs. 100 each.
However, being the first month of launching, it was sold at a discounted price of Rs. 75 each. 4,000 tooth brushes were sold in
August 2022.

Goods invoiced at Rs. 325,000 (net of special discount of Rs. 125,000) sold to a government official.

1,800,000

400,000

1,000,000

(ii)            Exports include supply of taxable goods of Rs. 500,000 to a retailer in Export Processing Zone.
(iii)           Exempt supplies include distribution of free samples of exempt goods among the vendors. Value of such goods amounted 

(i)             Supply of taxable goods to registered persons include the following:

1,700,000

(iv)         Purchases from registered suppliers include:

(ix)         Excess of input tax over output tax in July 2022 amounted to Rs. 75,000.

(iii)           Exempt supplies include distribution of free samples of exempt goods among the vendors. Value of such goods amounted 
to Rs. 80,000.

material worth Rs. 350,000 the payment of which was made by depositing cash directly in the business bank
account of the supplier.

• material worth Rs. 800,000 against which a discrepancy has been indicated by the CREST.


• an amount of Rs. 2,000,000 paid for purchase of raw material. However, only 30% of the goods were supplied
  during August for which sales tax invoice has been issued by the supplier.
  (v)             On 1 August 2022, CA executed an agreement with Majeed Sons (MS) for sale of locally purchased goods worth Rs. 
  225,000. The agreement empowers MS to obtain delivery of these goods anytime it likes.
  (vi)    Supplies returned by different registered persons amounted to Rs. 756,000. Proper debit and credit notes were raised within  
  the specified time.
  (vii)           The auditors have proposed a provision against obsolete and expired stock of Rs. 285,000 which is lying in CA’s 
  warehouse since January 2022.
  (viii)        Machinery purchased during the month was commissioned into operations on 31 August 2022.

Except where otherwise specified, all figures are exclusive of sales tax. Rate of sales tax is 17%.

Answer
Cyma Associates
Computation of Sales Tax Payable/Refundable
For the tax period August 2022

Taxable Value Sales Tax Rate Sales Tax

SALES TAX CREDITS (INPUT TAX)

(ix)         Excess of input tax over output tax in July 2022 amounted to Rs. 75,000.

Required:
Compute the sales tax liability of CA for the month of August 2022.

------------------- Rupees -------------------
SALES TAX CREDITS (INPUT TAX)
Purchases from registered suppliers (20,000,000−350,000−800,000) 18,850,000 17% 3,204,500
Purchases from unregistered suppliers 1,800,000 inadmissible
Purchases of exempt goods from registered suppliers 400,000 inadmissible
Purchases against which cash deposited in bank account 350,000 inadmissible
Purchases against which discrepancy indicated by CREST 800,000 inadmissible
Fixed assets (Machinery) 1,000,000 17% 170,000
Total input tax 23,200,000 3,374,500
Less: Inadmissible/unadjusted input tax (W-1) (424,762)
Input tax for the month 2,949,738
Add: Excess of input tax over output tax of July 2022 75,000
Accumulated credit 3,024,738

SALES TAX DEBIT (OUTPUT TAX)

Local taxable supplies - to registered suppliers 14,875,000 17% 2,528,750
(15,000,000+500,000−325,000−300,000)
Local taxable supplies - to unregistered persons (Note 1) 2,800,000 17% 476,000
Local taxable supplies - according to agreement with Majeed sons 225,000 17% 38,250
Local taxable supplies - to government official (325,000+125,000) 450,000 17% 76,500
Local taxable supplies - sale of tooth brushes 400,000 17% 68,000
18,750,000
Exempt supplies - no effect of free samples given 1,700,000 -
Export (zero rated) (1,500,000−500,000) 1,000,000 -
Output tax for the month 21,450,000 3,187,500

(15,000,000+500,000−325,000−300,000)

Conceptual Approach to Taxes___ _947