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Chapter
07
SOLVED PAST PAPERS SALES TAX NUMERICALS OF
MOD-C (2003 TO 2016)
Note: All the following questions have been solved under the Sales Tax Act effective from July 1st 2016.
September 2016 Q. NO. 5 Sammaj Associates (SA) is registered under the Sales Tax 1990 and is engaged in the business of
manufacturing, trading and export of electronic, chemical and other consumer goods, Following information has been extracted from
SA’s records for the month of August 2016:
Rupees
Supplies:
To registered persons 2,500,000
To un-registered persons 875,000
To person registered as exporter 625,000
Purchases:
Raw material from registered persons 930,000
Finished goods from un-registered persons 725,000
Packing material from registered persons 510,000
Local machinery from un-registered person 360,000
Import-finished goods 472,000
Packing material from registered persons include material worth Rs. 150,000 which was used for packing electric motors. On 31 August
2016 these motors were still part of SA’s unsold stock.
Following transactions pertaining to August 2016 are not included in the above table:
(i) Sales tax of Rs. 70,000, Rs. 45,000 and Rs. 68,000 was paid in cash on electricity, gas and telephone bills
respectively.
(ii) SA purchased high quality cables and wires worth Rs. 250,000 from a registered supplier for the installation
of local machinery purchased from un-registered suppliers.
(iii) Three cartons of imported shampoo, falling under third schedule, were supplied to un-registered distributors
at a price of Rs. 11,000 per carton. The distributors normally supply such shampoo to retailers at a price of Rs. 135,000
per carton.
(iv) Five electric kettles worth Rs. 75,000 were purchased for use in the offices of factory manager and first line-
supervisors of production workers.
(v) On 5 August 2016 Sa received advance of Rs. 600,000 against supply of electric shavers of Bari Electronics. SA
agreed to deliver the goods in September 2016.
(vi) On 25 August 2016 SA issued discount coupons worth Rs. 450,000 its customers for participating in grand
annual sales exhibition to be held in December 2016.
Solution
Rs. Rs.
Output tax
Local taxable supplies to registered persons (Rs. 2,500,000 x 17%) 425,000
Taxable supplies to unregistered persons U/S 3 (Rs.875,000 x 17%) (Note - 2) 148,750
Person registered as exporter (625,000 x 17%) - assumed not registered under DTRE 106,250
Supply of shampoo (Rs. 135,000 x 3 = 405,000 x 17%) 68,850
Input tax
Input tax (Note - 1) 274,040
Sales tax paid on electricity bills (Rs. 70,000 + 45,000 + 68,000) 183,000
Add sales tax credit b/f 30,000
Total input (A) 304,040
90% of output tax (B) 673,965
Less: Admissible input tax: lower of (A) or (B) 304,040
Sales tax payable 444,810
Add 2% further tax on supplies to un registered persons (Rs.875,000 x 2%) 17,500
Net total sales tax payable 462,310
Supplies Rupees
Jet fuel to Pak Airways proceeding to Oslo 800,000
Taxable goods to registered customers 500,000
Taxable goods to un-registered customers 375,000
Purchases
Taxable goods from registered suppliers 650,000
Taxable goods from un-registered suppliers 150,000
Exempt goods from registered suppliers 100,000
Imports – raw material 280,000
(v) Taxable goods to un-registered customers include goods worth Rs. 200,000 sold to cottage industry
in Bela. The rest of the goods were sold to educational institutions in Zhob.
(vi) On 15 February 2016 MA signed an agreement with Bali Traders (BT), a registered customer, for the
sale of goods worth Rs. 290,000. On 20 February 2016 the goods were made available to BT.
However, BT took the delivery of goods on 5 March 2016.
(vii) MA sold goods worth Rs. 52,000 to one of its customers on two months credit. The amount was
inclusive of 4% mark-up.
(viii) MA distributed free samples of one of its new detergents Zeta among corporate clients. The value
of these samples amounted to Rs. 65,000.
(ix) MA issued a debit note of Rs. 35,000 to Hali Brothers to rectify a mistake in MA’s sales invoice. The
invoice was originally raised in November 2015.
(x) On 1 February 2016 MA sold 4,000 packs of a new caramel ice cream, covered under Third Schedule, at
a discounted price of Rs. 100 per litre pack. The retail price of the ice cream was Rs. 160 per litre pack.
(xi) Sales tax credit brought forward from January 2016 amounted to Rs. 245,000. This amount was
inclusive of input tax of Rs. 120,000 paid on a chemical which could not be used before the expiry date
and was consequently destroyed in February 2016.
All the above figures are exclusive of sales tax, wherever applicable. Sales tax is payable at the rate of 17%.
Required
Under the provisions of the Sales Tax Act, 1990 and Rules made thereunder, compute the amount of
sales tax payable by/refundable to MA and the amount of sales tax to be carried forward, if any, for the
tax period February 2016.
Note: show all relevant exemptions, exclusions and disallowances.
ANSWER
Rahbar is registered under the Sales Tax Act, 1990 and is engaged in the business of manufacture and
supply of specialized equipment. Following information has been extracted from his records for the month of
August 2015.
Supplies: Rupees
to corporate customers – registered 20,000,000
to Government hospitals – un-registered 3,780,000
Purchases - Raw material:
from cottage industry 550,000
from local registered persons 25,800,000
Wires and cables of Rs. 500,000 and electrical and sanitary fittings of Rs 900,000. These items
were used in the renovation of a factory building.
(ii) An electronic cash register was purchased from High Tech Limited at Rs. 250,000.
On 18 August 2015 Rahbar acquired a machine on operating lease from Aroma Limited. The total
(iii) lease rentals payable over the lease term of two years are Rs. 3,500,000. The fair value at the
inception of the lease amounted to Rs. 3,100,000.
(iv) On 28 August 2015, Rahbar paid sales tax of Rs. 170,000 on electricity bill.
Own manufactured equipment worth Rs. 375,000 was used for internal testing purposes in R&D
(v)
department.
(vi) Rahbar made free replacement of faulty parts on request from three of his customers. These parts
were covered under warranty and had a market value of Rs. 175,000.
All the above figures are exclusive of sales tax, wherever applicable. Sales tax is payable at the rate of 17%.
Required:
Under the provisions of the Sales Tax Act, 1990 and Rules made thereunder, compute the amount of sales tax
payable by or refundable to Rahbar and the amount of sales tax to be carried forward, if any, for the tax period
August 2015.
Note: show all relevant exemptions, exclusions and disallowances.
ANSWER
Rahbar
Computation of Net Sales Tax Liability
For the tax period August 2015
SALES TAX CREDIT (INPUT TAX) Taxable Sales Tax Amount of
Value Rate Sales Tax
Raw material purchased from cottage industry 550,000 Exempt -
Raw material purchased from local registered persons W1 20,800,000 17% 3,536,000
Electronic cash register 250,000 17% 42,500
Machine on operating lease 3,100,000 Inadmissible -
consumer goods. Following information has been extracted from his records for the month of February 2015.
Rupees
Supplies
To registered persons 25,980,000
To unregistered persons 2,500,000
Exempt supplies 1,874,000
Export to USA 2,000,000
Purchases
Purchases from registered person 21,710,000
Import of a machine 2,500,000
Required:
Under the provisions of the Sales Tax Act, 1990 and Rules made thereunder, compute sales tax
payable/refundable and input tax credit to be carried forward, if any, for tax period February 2015.
Solution
Mr. Bashir
Computation of Sales tax payable / refundable
For the period of February 2016
Output Tax
Sales to registered person 4,433,600
Sales to unregistered person 425,000
Exempt Supplies -
Export 2,000,000 x 0% -
4,858,600
Input tax
Residual Input tax W-1 3,175,291
Not claimed input tax 55,900
Sales tax credit 410,000
3,641,191
or 90% of 4,858,600 4,372,740 3,641,191
1,217,409
Add: Further Sales Tax 50,000
Less: Input tax on fixed assets (374,268)
Sales tax payable with return 893,140
Q.NO.6 Autumn 2014 Ali Trading Company (ATC) is registered under the Sales Tax Act, 1990 and is engaged in the
business of manufacture and supply of consumer goods. Following information has been extracted from the
records of ATC for the month of August 2014.
Rupees
Supplies
Local supplies to wholesalers 14,500,000
Local supplies to distributors 10,254,980
Exports 18,650,000
Local supplies to registered retailers 980,000
Supply of exempted goods 5,500,000
Purchases
Local purchases from registered persons 50,982,000
Local purchases from un-registered persons 9,200,000
Sales tax is payable at the rate of 17%. All the above figures are exclusive of sales tax.
Required:
Under the provisions of the Sales Tax Act, 1990 compute sales tax payable/refundable and input tax
credit to be carried forward, if any, for August 2014.
Solution
Q. NO. 9 Spring 2014 Zaheer is registered under the Sales Tax Act, 1990. He is engaged in the manufacture and
supply of spare parts. Following information has been extracted from the records for the month of February 2014.
November 2013. However, the input tax on this invoice could not be claimed in the relevant period.
(ii) Taxable supplies amounting to Rs. 1.2 million were returned by different customers. Proper debit /
credit notes were raised in respect of such supplies.
(iii) Raw materials purchased from registered suppliers include an amount of Rs. 2.5 million against which
100% advance was paid in the month of January 2014. However, due to a dispute, sales tax invoice was
delayed and was received by the company after filing of return.
(iv) Sales tax credit of Rs. 1.2 million was brought forward from previous month.
Sales tax is payable at the rate of 17%. All the above figures are exclusive of sales tax.
Required:
Compute the sales tax payable by or refundable to Zaheer along with input tax to be carried forward, if any, in the
sales tax return for the month of February 2014.
Rs. Rs.
Output tax on:
(N - 1) As the zero rated supplies are less than 50% of all taxable supplies under SRO 647(I)/2007 dated June 27, 2007, therefore
90% limitation is applicable U/S 8B of the Sales Tax Act, 1990.
(N - 2) It has been assumed that 2% further tax is applicable on local taxable supplies to unregistered persons hence further tax
shall be accounted for and paid seperately 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.
(Note - 3) A registeed person is not entitled to claim input tax attirbutable to exempt supplies under section 8(2) of the Sales tax
Act, 1990.
(Note - 4) A registred person is not entitled to deduct input tax from output tax for taxable supply without holding a sales tax
invoice under section 7(2)(i) of the Sales tax Act, 1990.
Where a registered person has not deducted input tax in the relevant tax period, he may claim such tax in the return for
any of the six subsequent tax periods under proviso of section 7(1) of the Sales Tax Act, 1990.
In view of the above no adjustment of 100% advance made against purchases in the preceeidng tax period has been
made in the current tax period.
Faizan is registered under the Sales Tax Act, 1990 and is engaged in the business of manufacture and supply of engineering goods.
Following information has been extracted from his records for the month of August 2013.
Discounts
Gross amount Net amount
allowed
-------------------- Rupees --------------------
Local supplies to registered persons
- Noori Limited 16,000,000 800,000 15,200,000
- Soori Limited 4,000,000 400,000 3,600,000
Local supplies to unregistered persons 4,200,000 210,000 3,990,000
Exports to Jordan 6,000,000 - 6,000,000
(ii) Faizan normally allows 5% discount to all its customers. However, as a special case, a discount of 10% was allowed
to Soori Limited. All the discount were shown on the invoice.
(ii) Supplies worth Rs. 617,500 (net of discount ) were returned by Noori Limited. Proper debit and credit notes were
issued in this regard.
(v) Records indicate that a pump and a motor were given to Fizan's friend, free of cost. The list price of the pump and
motor was Rs. 33,000.
(vi) Faizan is required to pay a penalty of Rs. 10,000 under the Sales Tax Act, 1990 on account of certain defects in the
maintenance of records.
(vii) Sales tax credit brought forward from previous month amounted to Rs. 850,280.
(viii) Sales tax is payable at the rate of 17% All the above figures are exclusive of sales tax.
Required:
Compute the sales tax payable by or refundable to Faizan along with input tax to be carried forward, if any, in the sales tax
return for the month of August 2013.
Solution
Mr Faizan
Sales Tax Liability
Tax Period: August 2015
Rupees
Output tax:
Rs. Rate of sales tax Sales tax Rs.
on local supplies to registered persons
- Noori Limited U/S 3 15,200,000 17% 2,584,000
- Soori Limited (value after 5% discount) U/S 3 3,800,000 17% 646,000
On local supplies to unregistered persons (N - 4) 3,990,000 17% 678,300
On exports to Jordan [U/S 4 read with 5th Schedule] 6,000,000 0% -
On goods given to Friend, free of cost U/S 3 33,000 17% 5,610
Less: sale return [U/S 9 read with Rule 22] 617,500 17% (104,975)
29,640,500 3,808,935
Input tax:
(N - 1) Input tax
Input tax on Local purchases from registered persons (Rs. 27,000,000 x 17%) 4,590,000
29,023,000 4,590,000
(N - 3) As the zero rated supplies are less than 50% of all taxable supplies under SRO 647(I)/2007 dated June 27, 2007, therefore
90% limitation is applicable U/S 8B of the Sales Tax Act, 1990.
(N - 4) It has been assumed that 2% further tax is applicable on local taxable supplies to unregistered persons hence further tax
shall be accounted for and paid seperately 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.
Mr. Clever a manufacturer of household appliances, is registered under the Sales Tax Act, 1990. Following
information has been extracted from its records for the month of February 2013:
Supplies Rupees
Local supplies of manufactured good to registered persons 26,860,000
Local supplies of manufactured good to unregistered persons 3,550,000
Local supplies of zero-rated goods 1,250,000
Exports to Malaysia 15,000,000
Local purchases
Registered persons 40,550,000
Unregistered persons 5,000,000
(i) Supplies worth Rs. 1,300,000 were returned by different registered persons. Proper debit/ credit
notes were raised within the specified time.
(ii) Local purchase from registered person include and invoice Re. 60,000 which was issued in the name
of Mr. Clever's uncle.
(iii) A new machine amounting to Rs. 3,000,000 was imported from china and put into operation during
the same month.
(iv) Sales tax credit of Rs. 410,000 was brought forward from pervious month.
Sales tax is payable at the rate fo 16%. All the above amounts are exclusive of sales tax.
Required:
Compute the sales tax payable by /refundable to Mr. Clever along with input tax to be carried forward, if any, in the
sales tax return for the month of February 2013.
Solution
Sales tax
Output tax Rs. Rs.
Input to be carried forward [(A) without fixed assets admissible input - (B)]
[Rs.4,896,094 - Rs.4,453,830] 442,264
Sales tax refundable in respect of exports U/S 10(1) (Working attached) 2,574,821
(Note - 1) As the zero rated supplies are less than 50% of all taxable supplies under SRO 647(I)/2007 dated June 27,
2007, therefore 90% limitation is applicable U/S 8B of the Sales Tax Act, 1990. The said limitation is not
applicable on input tax paid on acquistion of fixed assets.
(Note - 2) It has been assumed that 2% further tax u/s 3(1A) applicable on local taxable supplies to unregistered persons
under SRO 648(I)/2013 dated July 09, 2013 hence further tax shall be accounted for and paid seperately
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.
(Note - 3) As purchases from non-registered persons are without sales tax invoices hence the same shall be without
sales tax u/s 23(2) of the Sales Tax Act, 1990, therefore the question of adjustment of input tax is not
applicable.
Zainab is registered under the Sales Tax Act, 1990 and is engaged in the manufacture and supply of Products A and B.
Following information has been extracted from her records for the month of August 2012:
Product A Product B
Rs. Rs.
Supplies
Local supplies 5,350,000 1,010,000
Export to Thailand 2,550,000 3,950,000
Purchases
Local materials from registered persons 6,000,000
Local materials from unregistered persons 850,000
Additional information
Required:
In the light of Sales Tax Act, 1990 and Rules made thereunder, calculate the following for the month of August 2012:
(a) Sales tax payable / refundable
Solution
(a)
Sales tax
Rs. Rs.
Output tax
Local taxable supplies [U/S 3 (Rs. 1,110,000 x 17%] 188,700
Local exempt supplies [U/S 13 read with 6th Schedule] -
Exports (zero rated) [U/S 4 read with 5th Schedule] -
Total output tax 188,700
(b) Sales tax refundable on export sales U/S 10(1) (Note - 1) 507,311
* Input tax on purchases from registered persons i.e. [(6,000,000-150,000+100,000) x 17%] = 1,011,500
(Note - 2) As the zero rated supplies are more than 50% of all taxable supplies under SRO 647(I)/2007 dated June 27,
2007, therefore 90% limitation is not applicable U/S 8B of the Sales Tax Act, 1990.
(Note - 3) A registeed person is not entitled to claim input tax attirbutable to exempt supplies under section 8(2) of the
Sales tax Act, 1990.
Mr. Agha is registered under the Sales Tax Act, 1990. He is engaged in the supply of household appliances and has
provided you the following information for the month of August 2011:
Goods worth Rs. 1,500,000 were returned by a registered person. Proper debit/credit notes have been issued in
this regard.
Goods purchased from unregistered persons were exclusively used for making taxable supplies. An amount of Rs.750,000
is payable to a registered person since February 01, 2011.
(iii) Sales tax credit of Rs. 610,000 has been brought forward from previous month.
(iv) All the above amounts are exclusive of sales tax.
(v) Agha is also required to pay a penalty of Rs. 10,000 under the Sales Tax Act, 1990 on account of certain defects in the
maintenance of records.
Required:
Compute the sales tax payable/(refundable) by/to Mr. Agha along with input tax to be carried forward, if any, in the sales tax
return for the month of August 2011.
Solution
Rs. Rs.
Output tax
Local taxable supplies to registered persons U/S 3 (Rs. 35,550,000 x 17%) 6,043,500
Taxable supplies to unregistered persons U/S 3 (Rs.1,700,250 x 17%) (Note - 2) 289,043
Exports to USA and Canada [U/S 4 read with 5th Schedule] -
Supplies of exempt goods [U/S 13 read with 6th Schedule] -
Sales tax in respect of goods returned [U/S 9 read with Rule 22] (255,000)
Total output tax 6,077,543
Input tax
Input tax apportioned to local taxable supplies (Note - 1) 5,008,202
Add sales tax credit b/f 610,000
Total input (A) 5,618,202
90% of output tax (B) 5,469,788
Less: Admissible input tax: lower of (A) or (B) 5,469,788
Sales tax payable 607,754
(Note - 2) As the zero rated supplies are less than 50% of all taxable supplies under SRO 647(I)/2007 dated June 27,
2007, therefore 90% limitation is applicable U/S 8B of the Sales Tax Act, 1990.
(Note - 3) It has been assumed that 2% further tax u/s 3(1A) is not applicable on local taxable supplies to unregistered
persons under SRO 648(I)/2013 dated July 09, 2013 otherwise further tax shall be accounted for and paid
seperately 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.
(Note - 4) As purchases from non-registered persons are without sales tax invoices hence the same shall be without
sales tax u/s 23(2) of the Sales Tax Act, 1990, therefore the question of adjustment of input tax is not
applicable.
(Note - 5) A registeed person is not entitled to claim input tax U/S 73 where the payment against invoices exceeding Rs.
50,000 has not been made within 180 days of the issuance of tax invoices unless condonaion of time limit
approval from the of Board has been obtained U/S 74 of the Sales Tax Act, 1990.
(Note - 6) A registeed person is not entitled to claim input tax attirbutable to exempt supplies under section 8(2) of the
Sales tax Act, 1990.
Maroof Engineering Limited (MEL) is registered under the Sales Tax Act, 1990. The company is engaged in the
manufacture & supply of spare parts. Following information has been extracted from the records of MEL for February 2011
month.
Rupees
Purchases:
Local Material:
from registered suppliers 15,000,000
from un-registered suppliers 8,000,000
Supplies:
Manufactured goods:
local taxable supplies to registered persons 10,000,000
local taxable supplies to un-registered persons 3,000,000
export to Taiwan 10,000,000
exempt goods 2,000,000
(ii) Material purchased from un-registered suppliers was exclusively used for making taxable supplies.
(iii) Goods worth Rs. 500,000 were returned by different customers. Proper debit/credit notes were raised within the
specified period.
(iv) A new machinery of Rs 2.4 million was purchased and put to use during the same month.
(v) Rs. 20,000 was paid to a courier company for delivering gifts to MEL’s high value customers.
(vi) MEL’s purchases from registered suppliers include material worth Rs. 2 million against which an advance was paid in
the month of January 2011. However, due to a dispute, sales tax invoice was delayed and was received by the company
after filing of return.
(vii) Parts worth Rs. 15,000 were delivered to the CEO for his personal use, free of cost.
(viii) Sales tax credit of Rs. 50,000 was brought forward from previous month.
Required:
(a) Compute the sales tax payable/refundable.
(b) Input tax credit to be carried forward, if any.
Solution
Rs. in ‘000 Rs. in ‘000
Taxable Value Sales Tax
Sales Tax Credit (Input Tax)
Local purchases:
− From registered persons (Rs. 15.0 m – Rs. 3.0 m) 12,000 2,040
− From un-registered persons (Note - 5) 8,000 -
Fixed assets (Machinery) (Note - 2) 2,400 408
Courier charges (Not admissible being not related to production / purchases) 20 -
On local supplies [Rs. 1,324 - Rs. 212 (408/ 25,015 x 13,015)] (A) 1,112
90% of output tax (Rs. 2,128 x 90%)= (B) 1,915
(Note - 2) As the zero rated supplies are less than 50% of all taxable supplies under SRO 647(I)/2007 dated June 27,
2007, therefore 90% limitation is applicable U/S 8B of the Sales Tax Act, 1990. The said limitation is not
applicable on input tax paid on acquistion of fixed assets.
(Note - 3) It has been assumed that 2% further tax u/s 3(1A) is not applicable on local taxable supplies to unregistered
persons under SRO 648(I)/2013 dated July 09, 2013 otherwise further tax shall be accounted for and paid
seperately 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.
(Note - 4) A registeed person is not entitled to claim input tax attirbutable to exempt supplies U/S 8(2) of the Sales Tax
Act, 1990.
(Note - 5) As purchases from non-registered persons are without sales tax invoices hence the same shall be without
sales tax u/s 23(2) of the Sales Tax Act, 1990, therefore the question of adjustment of input tax is not
applicable.
Abdul Ghaffar is registered as a manufacturer, under the Sales Tax Act, 1990. He carried out the following activities during
the month of August 2010:
Rs. in 000
Supplies
Manufactured goods
• Local - taxable goods 22,000
• Local - exempt goods 3,000
• Exports 5,000
Commercial goods 14,000
Purchases
Local purchases of raw material 8,000
Import of raw material 17,000
Commercial import of finished goods 10,000
(ii) Commercial imports are stated at C and F value and are subject to customs duty at the rate of 15%.
(iii) In July 2010, an amount of Rs. 365,000 was carried forward as sales tax credit.
(iv) Sales tax is payable @ 16% except commercial imports which are charged @ 19%.
Solution
Rs. in '000' Rs. in '000' Rs. in '000'
SALES TAX CREDIT (INPUT TAX) Taxable value Sales tax Sales tax
(Note - 2) As the zero rated supplies are less than 50% of all taxable supplies under SRO 647(I)/2007 dated June 27,
2007, therefore 90% limitation is applicable U/S 8B of the Sales Tax Act, 1990.
(Note - 2) As commercial imports subject to 3% additional tax are less than 50% of all taxable puchases under SRO
647(I)/2007 dated June 27, 2007, therefore 90% limitation is applicable U/S 8B of the Sales Tax Act, 1990.
(Note - 3) A registeed person is not entitled to claim input tax attirbutable to exempt supplies U/S 8(2) of the Sales Tax
Act, 1990.
Mr. Kaleem is registered under the Sales Tax Act, 1990 as a manufacturer as well as a commercial importer. He has
provided you the following information for the month of February 2010:
Rs. in million
Export sales – manufactured goods 30
Purchases
Local purchases of raw material from:
All the above amounts are exclusive of sales tax. Commercial imports have been stated at C and F value and are subject to
customs duty at the rate of 10%. There was no stock of commercial imports at the beginning or end of the month.
Required: Compute the sales tax liability of Mr. Kaleem along with input tax to be carried forward (if any) in his sales tax
return for the month of February 2010. (Ignore the feect of minimum value addition in case of commercial imports).
Solution
Rs. Rs.
Sales tax liability:
Output tax local manufactured taxable supplies U/S 3 (Rs. 120,000,000 x 17%) 20,400,000
Output tax local supplies out of commercial imports U/S 3 (Rs. 60,000,000 x 17%) 10,200,000
30,600,000
Input tax on commercial imports (44,000,000 x 17% without value addition) 7,480,000
Input tax against local taxable supplies (Note - 1) 19,200,000
(A) 26,680,000
90% of output tax (Rs. 30,600,000 x 90%) (B) 27,540,000
Less admissible input tax: lower of (A) or (B) 26,680,000
Balance sales tax payable 3,920,000
Input tax:
Input tax on purchases from registered persons (Rs. 160,000,000 x 17%) 27,200,000
27,200,000
(Note - 2) As the zero rated supplies are less than 50% of all taxable supplies under SRO 647(I)/2007 dated June 27,
2007, therefore 90% limitation is applicable U/S 8B of the Sales Tax Act, 1990.
(Note - 3) A registeed person is not entitled to claim input tax attirbutable to exempt supplies U/S 8(2) of the Sales Tax
Act, 1990.
Mr. Asif is registered under the Sales Tax Act, 1990. Following information for August 2009 month has been extracted from
his business records:
Required: Compute the sales tax payable and/or to be carried forward by Mr. Asif in the return for the month of August
2009.
Solution
Input tax:
Input tax on purchases from registered persons (8,000,000 x 17%) 1,360,000
1,360,000
(Note - 1) Apportionment of residual input tax
[U/R 25 of the Sales tax Rules, 2006] Supplies Residual input
tax
Rs. Rs.
Taxable local supplies 8,000,000 518,095
Exports 11,000,000 712,381
Exempt supplies (Note - 4) 2,000,000 129,524
21,000,000 1,360,000
(Note - 2) As the zero rated supplies are more than 50% of all taxable supplies under SRO 647(I)/2007 dated June 27,
2007, therefore 90% limitation is not applicable U/S 8B of the Sales Tax Act, 1990.
(Note - 3) It has been assumed that 2% further tax u/s 3(1A) is not applicable on local taxable supplies to unregistered
persons under SRO 648(I)/2013 dated July 09, 2013 otherwise further tax shall be accounted for and paid
seperately 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.
(Note - 4) A registeed person is not entitled to claim input tax attirbutable to exempt supplies U/S 8(2) of the Sales Tax
Act, 1990.
Value
excluding Sales Tax @ Value including
Sales Tax 16% Sales Tax
Rupees Rupees Rupees
Sales
- Taxable 6,000,000 960,000 6,960,000
- Exempt 4,000,000 0 4,000,000
10,000,000 960,000 10,960,000
Purchases
- Raw materials 9,200,000 1,472,000 10,672,000
- Fixed assets 1,700,000 272,000 1,972,000
10,900,000 1,744,000 12,644,000
Required: Work out sales tax liability of Mr. Azad along with input tax to be carried forward (if any) in his sales
tax return.
Solution
Input tax:
Input tax on raw material 1,564,000
1,564,000
(Note - 2) A registeed person is not entitled to claim input tax attirbutable to exempt supplies U/S 8(2) of the Sales Tax
Act, 1990.
(Note - 3) As the none of the clause of SRO 647(I)/2007 dated June 27, 2007 is applicable, therefore 90% limitation is
applicable U/S 8B of the Sales Tax Act, 1990.
Mr. Adam is a registered person and engaged in the supply of various types of appliances for last many years. He has
provided you the following information for the month of February 2007:
i. Supplies made during the month amount to Rs. 95 million. Details of supplies made are as follows:
Rs. in million
Exports 50
Exempt supplies 10
Supplies to registered person 30
Supplies to unregistered person 5
ii. During the month, he has made an adjustment of Rs. 500,000 through credit note in a registered
person’s balance.
iv. All goods purchased from unregistered persons are exclusively used for making taxable supplies.
v. An amount of Rs. 3,000,000 is payable to a registered person since December 20, 2006. The input tax on the
purchase as accounted for in the relevant tax period.
Arrears 500,000
Surcharge 70,000
Penalty 30,000
Compute Mr. Adam’s sales tax liability.
Solution
Arrears 500,000
Surcharge 70,000
Penalty 30,000
Payable 600,000
Sales tax payable 3,646,579
Input tax:
Input tax (45,000,000 x 17%) 7,650,000
7,650,000
(Note - 2) As the zero rated supplies are more than 50% of all taxable supplies under SRO 647(I)/2007 dated June 27,
2007, therefore 90% limitation is not applicable U/S 8B of the Sales Tax Act, 1990.
(Note - 3) It has been assumed that 2% further tax u/s 3(1A) is not applicable on local taxable supplies to unregistered
persons under SRO 648(I)/2013 dated July 09, 2013 otherwise further tax shall be accounted for and paid
seperately 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.
(Note - 4) A registeed person is not entitled to claim input tax attirbutable to exempt supplies U/S 8(2) of the Sales Tax
Act, 1990.
Following information is extracted from the records of M/s Rainbow Enterprises (Private) Limited. The information pertains
to the month of July 2005:
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
Sales of exempt goods 1,000,000
Examination of creditors’ ledger reveals that an amount of Rs.100,000 is still outstanding on account of the purchase made
from a registered supplier on January 12, 2005. The input tax on the said purchase was accounted for in the relevant tax
period.
Goods purchased from unregistered suppliers are exclusively used for making taxable supplies.
Solution
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 - 2) As the zero rated supplies are less than 50% of all taxable supplies under SRO 647(I)/2007 dated June 27,
2007, therefore 90% limitation is applicable U/S 8B of the Sales Tax Act, 1990.
(Note - 3) It has been assumed that 2% further tax u/s 3(1A) is not applicable on local taxable supplies to unregistered
persons under SRO 648(I)/2013 dated July 09, 2013 otherwise further tax shall be accounted for and paid
seperately 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.
(Note - 4) A registeed person is not entitled to claim input tax attirbutable to exempt supplies U/S 8(2) of the Sales Tax
Act, 1990.
Following is the pertinent data relating to sales tax return of the company:
Output tax
(a) You are required to compute the sales tax payable alongwith the monthly sales tax return for the tax period July 2003,
August 2003 and September 2003 with brief explanatory notes, where relevant.
(b) With reference to data in (a) above, assuming that on October 20, 2003 it was found that input tax claim relating to tax
period July 2003 amounting to Rs. 50,000 was inadvertently not claimed in the sales tax return filed for that period. On
November 10, 2003, it was also found out that there was another input tax claim relating to tax period September 2003
amounting to Rs.25,000 which was not claimed in the monthly return filed for that period.
You are required to advise as to whether such unclaimed amounts could be claimed under the Sales Tax Act, 1990. If your
answer is in affirmative, then briefly explain the procedure for claiming such amounts.
(c) With reference to data (a) above, & disregarding the errors given in (b) above], assuming that in the month of November
2003, it was found that output tax of Rs. 1,300,750 shown in the monthly return for tax period October 2003 was infact Rs.
1,350,750 i.e. short declared by Rs. 50,000.
You are required to briefly explain the remedy, if any, available in the STA, 1990 to account for this error.
Solution
The question has been solved by assuming that the rate of output tax given in the question is 17% instead of 15%.
90% of output tax (90% x A above) (Note - 3) (C) 1,237,500 1,058,175 1,089,000
Less admissible input tax: lower of (B) or (C) 1,237,500 1,058,175 1,050,000
Balance sales tax payable 137,500 117,575 160,000
Input tax carried forward 284,325 391,825 -
Effect of further tax under section 3(IA) has not been taken into account as the same can not be adjusted against output tax
and further the additional sales to unregistered persons tax has been reduced from 3% to 1% with effect from tax year
2014.
(Note - 3) As the none of the clause of SRO 647(I)/2007 dated June 27, 2007 is applicable, therefore 90% limitation is
applicable U/S 8B of the Sales Tax Act, 1990.
(b)
Under section 7(1) it is provided that where a registered person did not deduct input tax within the relevant period, he may
claim such tax in the return for any of the six succeeding tax periods therefore both the input may be claimed in the monthly
sales tax returns for the tax period October.
(c)
Under section 11A of the Sales Tax Act, 1990. where a registered person pays the amount of tax less than the tax due as
indicated in his return, the short paid amount of tax alongwith default surcharge shall be recovered from such person and no
penalty under section 33 shall be imposed unless a show cause notice is given to such person.
Star Enterprises has submitted the following data for the month of March 2003
Rupees
Total Sales-registered 1,000,000
Total Sales-Unregistered 5,000,000
Export Sales 2,500,000
Exempt Supplies 500,000
Gross Purchases-from Registered suppliers 6,500,000
Gross Purchases-from Unregistered suppliers 500,000
Purchase Return-to Registered suppliers 650,000
Required: You are required to compute sales tax liability of Star Enterprises for the month of March 2003.
Solution
Input tax:
On taxable supplies (Rs. 6,500,000 x 17%) 1,105,000
Less: Sales tax on purchase returns [U/S 9 read with Rule 22] (Rs. 650,000 x 17%) 110,500
994,500
(Note - 2) As the zero rated supplies are less than 50% of all taxable supplies under SRO 647(I)/2007 dated June 27,
2007, therefore 90% limitation is applicable U/S 8B of the Sales Tax Act, 1990.
(Note - 3) A registeed person is not entitled to claim input tax attirbutable to exempt supplies U/S 8(2) of the Sales Tax
Act, 1990.
(Note - 4) It has been assumed that 2% further tax u/s 3(1A) is not applicable on local taxable supplies to unregistered
persons under SRO 648(I)/2013 dated July 09, 2013 otherwise further tax shall be accounted for and paid
seperately 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.