Tax Book 2023

Chapter 07 Solved Past Papers Sales Tax Numericals of CA Module C

Rupees

Supplies to registered person 5,000,000
Supplies to unregistered person 1,500,000
Export Supplies 3,000,000
Purchase from registered suppliers 4,000,000
Purchase from unregistered suppliers 1,000,000

Q.NO. 12 Autumn 2005

FollowinginformationisextractedfromtherecordsofM/sRainbowEnterprises(Private)Limited.Theinformationpertainstothe
month of July 2022:

972 Conceptual Approach to Taxes

Purchase from unregistered suppliers 1,000,000
Sales of exempt goods 1,000,000

Goods purchased from unregistered suppliers are exclusively used for making taxable supplies.

Required: Determine the amount of sales tax liability.

Sales tax liability: Sales tax
Rs. Rs.
Output tax U/S 3 (Rs. 6,500,000 x 17%) (Note - 3 & 6) 1,105,000
Input tax against taxable local supplies (Note - 1) (A) 410,429

Solution

Examinationofcreditors’ledgerrevealsthatanamountofRs.100,000isstilloutstandingonaccountofthepurchasemadefroma

registered supplier on January 12, 2022. The input tax on the said purchase was accounted for in the relevant tax period.

Input tax against taxable local supplies (Note - 1) (A) 410,429
90% of output tax (Rs.1,105,000 x 90%) (A) 994,500
Less admissible input tax: lower of (A) or (B) 410,429
Balance sales tax payable 694,571

Sales tax refundable on exports U/S 10(1) (Note - 1) 189,429

Input tax:
Input tax on purchases from registered persons (4,000,000 x 17%) 680,000
Less: Sales tax on purchase outstanding for more than 180 days (100,000 x 17%) 17,000
663,000
(Note - 1)Apportionment of residual input tax Supplies Residul input
[U/R 25 of the Sales tax Rules, 2006] tax
Rs. Rs.
Taxable local supplies Taxable local supplies 6,500,0006,500,000 410,429410,429
Exports 3,000,000 189,429
Exempt supplies (Note - 4) 1,000,000 63,143
10,500,000 663,000
(Note - 2)

(Note - 3)

(Note - 4)

(Note- 5)

Ithasbeenassumedthat3%furthertaxu/s3(1A)isnotapplicableonlocaltaxablesuppliestounregisteredpersons

underSRO648(I)/2013datedJuly09, 2013 otherwisefurthertaxshallbeaccountedforandpaidseperatelywithout

adjustmentofthesameagainstinputtax/refundoftheregisteredpersonandfurtheritshallalsonotbeconsideredfor

the computation of 90% limitation on output tax.

A registeed person is not entitled to claim input tax attirbutable to exempt supplies U/S 8(2) of the Sales Tax Act, 1990.

NofurthertaxhasbeenchargedonsuppliescoveredunderFifthScheduletotheSalesTaxAct, 1990 byvirtueofSRO

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

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

(Note- 5)

Following is the pertinent data relating to sales tax return of the company:

Tax at the rate

of 17%

Further tax at the

rate of 3% u/s

3(IA)

Rupees Rupees Rupees

Output tax

Input tax

claimable

Q.NO.10 Spring 2004

(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.

Rupees Rupees Rupees

Jul-22 1,050,000 1,210,000 310,000

Aug-22 1,450,000 1,175,750 150,000

Sep-22 1,130,000 1,375,000 225,000

Oct-22 1,200,100 1,300,750 175,050

Nov-22 1,050,000 1,250,700 210,000

(a)YouarerequiredtocomputethesalestaxpayablealongwiththemonthlysalestaxreturnforthetaxperiodJuly2022,August
2022 and September 2022 with brief explanatory notes, where relevant.

972 Conceptual Approach to Taxes