Tax Book 2023

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

Mr. Zaheer

Computation of Sales tax

For the month of February 2023

Rs. Rs.

Output tax on:

Supplies to registered persons U/S 3 (12,000,000 x 17%) 2,040,000

Less: credit note (U/S 9 read with Rule 22) (1,200,000 x 17%) (204,000)

Solution:

Conceptual Approach to Taxes___ _959

Less: credit note (U/S 9 read with Rule 22) (1,200,000 x 17%) (204,000)

Supplies to un-registered personsU/S 3 ( 4,000,000 x 17%) (Note 6) 680,000

Exempt supplies (U/S 13 read with 6th Schedule) -

Zero rated exports (U/S 4 read with 5th Schedule) -

(A) 2,516,000

Input tax on:

Input tax (W - 1) 2,221,333

Brought forward 1,200,000

(B) 3,421,333

90% of output tax (N - 1) (Rs. 2,720,000 x 90%) (C) 2,264,400
Less: Admissible input tax: Lower of (B) or (C) (D) 2,264,400
Balance sales tax payable [A less D] 251,600
3% further sales tax on supplies to unregistered persons (N - 2) 120,000
Sales tax carried forward [B less C] 1,156,933
Tax Refund (W - 1) 1,527,167
Working of residual input tax:
Purchase from regitered person ( 23,000,000 x 17 %) 3,910,000
Raw material on which input not claimed ( 1,500,000 x 17%) 255,000
4,165,000
(W-1)
APPORTIONMENT OF RESIDUAL INPUT TAX:
Rs. Rs.
Supplies taxable to registered persons 12,000,000
Supplies taxable to un-registered persons 4,000,000

Supplies

Residual input

tax

Supplies taxable to un-registered persons 4,000,000

16,000,000 2,221,333

Supplies - exempt (N - 3) 3,000,000 416,500

Supplies export 11,000,000 1,527,167

30,000,000 4,165,000

(N - 1)

(N - 2)

(Note - 3)Aregisteedpersonisnotentitledtoclaiminputtaxattirbutabletoexemptsuppliesundersection8(2)oftheSalestaxAct,

1990.

Ithasbeenassumedthat3%furthertaxisapplicableonlocaltaxablesuppliestounregisteredpersonshencefurthertax

shallbeaccountedforandpaidseperatelywithoutadjustmentofthesameagainstinputtax/refundoftheregistered

person and further it shall also not be considered for the computation of 90% limitation on output tax.

Asthezeroratedsuppliesarelessthan50%ofalltaxablesuppliesunderSRO1190(I)/2019datedOctober02,2019,

therefore 90% limitation is applicable U/S 8B of the Sales Tax Act, 1990.

(Note - 4)

(Note - 5)

1990.

Aregistredpersonisnotentitledtodeductinputtaxfromoutputtaxfortaxablesupplywithoutholdingasalestaxinvoice

under section 7(2)(i) of the Sales tax Act, 1990.

Wherearegisteredpersonhasnotdeductedinputtaxintherelevanttaxperiod,hemayclaimsuchtaxinthereturnfor

any of the six subsequent tax periods under proviso of section 7(1) of the Sales Tax Act, 1990.

Inviewoftheabovenoadjustmentof100%advancemadeagainstpurchasesinthepreceeidngtaxperiodhasbeen

made in the current tax period.

(Note - 6) 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.

NofurthertaxhasbeenchargedonsuppliescoveredunderFifthScheduletotheSalesTaxAct, 1990 byvirtueofSRO

585(I)/2017, Dated: 01/07/2017.

on distributors otherwise proportionate input tax shall be disallowed under section 8(1)(m) of the Sales Tax Act, 1990.

Conceptual Approach to Taxes___ _959