ICAP Sales Tax-2

Chapter 07 Solved Past Papers Sales Tax Numericals of CA Mod- C
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.
Other related information is as under:

(i) On 10 February 2016 SA purchased liquid nitrogen worth Rs. 300,000 from Mughal Chemical (MC), a
(ii) In April 2016 SA inadvertently charged sales tax of Rs. 58,000 instead of 85,000 on supply of chemicals to one
(iii) In July 2016 SA claimed Input tax of Rs. 80,000 on purchase of hydrochloric acid from JB Traders. The
In July 2016 the excess of input tax over output tax amounted to Rs. 20,000. Whereas, unadjusted input tax in excess of 90% of output
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 SA and the amount of sales tax to be carried forward, if any, for the tax period August 2016.
Conceptual Approach to Taxes_______________________________________________ _____________________________693

Chapter 07 Solved Past Papers Sales Tax Numericals of CA Module C
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
Total output tax 748,850
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
Input tax working

Raw material purchased from registered persons (Rs. 930,000 x 17%) 158,100
Packing material from registered person (Rs. 510,000 x 17%) 86,700
Imports (Rs. 472,000 x 17%) 80,240
Cables and wires purchase [Tax credit not allowed u/s 8(1)(h)] -
Electrice kettles purchased [Tax credit not allowed u/s 8(1)(a)] -
Input tax disallowed due to late payment (Rs. 300,000 x 17%) (51,000)
Total input tax to be apportioned 274,040
Q.NO.1 SPRING 2016

Mulaqat Associates (MA), an association of persons, is registered under the Sales Tax Act, 1990
and is engaged in the business of manufacture and distribution of various products. Following information
has been extracted from MA’s records for February 2016:
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
Following information is also available:

(i) Taxable goods purchased from registered suppliers include furniture of Rs. 45,000 which was
acquired for use in the office of marketing manager.
(ii) Imports include raw materials worth Rs. 125,000 for the manufacture of shaving cream, covered
under Third Schedule. However, en route from port to MA’s warehouse in Uthal a serious
damage was caused to the consignment. MA received insurance claim of Rs. 90,000 after surrendering
the right of disposal of consignment in favour of the insurance company.
(iii) MA purchased 150 bags of cement, covered under Third Schedule, for the construction of a
bungalow for managing partner. Cement was purchased at the wholesale price of Rs. 400 per bag.
However, the retail price was Rs. 500 per bag.
(iv) Advance of Rs. 268,000 was made to Nomi Corporation for the purchase of packing materials.
694 Conceptual Approach to Taxes

(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
Mulaqat Associates (MA)

Computation of Net Sales Tax Liability
For the tax period February 2016
SALES TAX CREDIT (INPUT TAX) Taxable Value Sales Tax Amount of Sales
Rate Tax
Taxable goods from registered suppliers [650,000 - 45,000] 605,000 17% 102,850
Furniture for use in marketing manager's office 45,000 inadmissible -

Taxable goods from un-registered suppliers 150,000 inadmissible -
Exempt goods from registered suppliers 100,000 - -
Import of raw material 280,000 17% 47,600
Purchase of cement [being personal in nature] [150x500] 75,000 inadmissible -
Advance against purchase of packing material 268,000 17% 45,560
196,010
Add: Credit brought forward from previous month 245,000
Less: input tax on chemicals destroyed (120,000)
125,000
Input Tax for the month (Accumulated credit) 321,010
SALES TAX DEBIT (OUTPUT TAX)

Jet fuel to Pak Airways 800,000 0% -
Taxable goods to registered customers 500,000 17% 85,000
Taxable goods to Cottage Ind. In Bela 200,000 17% 34,000
Taxable goods to un-registered -end consumers 175,000 17% 29,750
Raw material to insurance company [treated as supply] 90,000 17% 15,300
Taxable goods to Bali Traders 290,000 17% 49,300
Taxable goods on two months credit 52,000 17% 8,840
Free samples of detergent Zeta 65,000 17% 11,050
Debit note issued to Hali Brothers 35,000 17% 5,950
Caramel ice cream [4,000 x 160] 640,000 17% 108,800
Output tax for the month 347,990
Further tax on supplies to cottage Ind. [200,000 x 2%] 4,000

Further tax on supplies to un-registered end consumers-Exempt

[175,000 x 0%]
-
Admissible credit (lower of 321,010 or 90% of 347,990 = 313,191
(313,191)
Sales tax payable (347,990 - 313,191 = 34,799) + (4000) 38,799
Input tax to be carried forward [321,010 - 313,191] 7,819
Q. NO. 2 AUTUMN 2015
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
Following information is also available:

(i) Purchases from local registered persons include the following:
Material worth Rs. 1,600,000 against which a discrepancy has been indicated by the CREST.
Raw-material of Rs. 2,000,000 purchased from AB Enterprises on 2 August 2015.The payment was
made on the same day by pay order. On 15 August 2015, AB Enterprises informed Rahbar that with
effect from 1 August 2015 their registration has been suspended by the Commissioner Inland Revenue.
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 -

Electricity bill - - 170,000

3,748,500
Less: inadmissible input tax W-2 (582,381)
Input tax for the month 3,166,119
Taxable supplies to corporate customers – registered 20,000,000 17% 3,400,000
Taxable supplies to Govt. hospitals un-registered 3,780,000 Exempt -
Equipment used for internal testing purposes 375,000 17% 63,750
Free replacement of under warranty parts 175,000 0 -
Output Tax for the Month 3,463,750
Admissible credit (lower of 3,166,119 – (42,500 – 6,603) = 3,130,222) or 90% of 3,463,750
=3,117,375
Admissible credit (3,117,375 + 35,897) 3,153,272
Sales tax to be carried forward (3,166,119 – 3,153,272 ) 12,847
Working: (W-1)
Purchases from local registered persons 25,800,000
Less: value of material on which input tax not admissible
Purchases against which discrepancy indicated by CREST (1,600,000)
Purchases from supplier whose registration has been suspended (2,000,000)
Purchase of wires and cables (500,000)
Purchase of electrical and sanitary fittings (900,000)
20,800,000
Apportionment of input tax: (W-2)
Residual input tax 3,748,500
Exempt supplies (Government hospital) 3,780,000
Total supplies (20,000,000 + 3,780,000 + 375,000 + 175,000) 24,330,000
Inadmissible input tax [(3,780,000 ÷ 24,330,000) × 3,748,500] 582,381
Q.NO.7 Spring 2015

Bashir is registered under the Sales Tax Act, 1990 and is engaged in the business of export and supply of
consumer goods. Following information has been extracted from his records for the month of February 2015.
Rupees
Supplies
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
Following additional information is also available:

(i) supplies to registered persons include goods amounting to Rs. 300,000 which were supplied to an associated
company at a special discount of 25%.
(ii) input tax amounting to Rs. 55,900 was paid in January, 2015 but inadvertently it could not be claimed in the
return for January 2015.
(iii) a registered supplier had supplied goods worth Rs. 500,000 to Bashir in February 2015. However, Bashir did not
receive the sales tax invoice from the supplier.
(iv) the imported machine was put into operation during February, 2015.
(v) sales tax credit of Rs. 410,000 is to be brought forward from January 2015.
Sales tax is payable at the rate of 17%. All the above amounts are exclusive of sales tax, wherever applicable.
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
Sales tax refundable 248,395
Apportionment of Input tax

Taxable Supplies Turnover Input tax Fixed Assets
Reg taxable 26,080,000 2,897,537 341,530
Unregd 2,500,000 277,755 32,739
Own Use - - -
wholly exempted 1,874,000 208,205 24,541
DTRE Person - -
Zero Rated 2,000,000 222,204 26,191
32,454,000 3,605,700 425,000
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


(i) Supplies amounting to Rs. 540,000 were returned by registered retailers.
(ii) An early settlement discount of Rs. 250,000 was given to local distributors.
(iii) An amount of Rs. 500,000 was received from Imran Associates, representing 25% advance payment in respect
of supply of a special order. ATC will supply this order in November 2014.
(v) Goods pledged with a bank, were disposed of by the bank for Rs. 4 million in satisfaction of debt owed
by ATC.
(vi) Sales tax credit brought forward from previous month amounted to Rs. 854,700.
(vii) Proper debit and credit notes have been issued wherever necessary.
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
Ali Trading Corporation

Computation of Sales tax payable / refundable
For the tax period August 2015
Output Tax Rs. Rs.
Local supplies to wholesalers 14,500,000 2,465,000

Local supplies to distributors 10,254,980 1,743,347
Exports 18,650,000 -
Local supplies to registered retailers 980,000 166,600
Supply of exempted goods 5,500,000 -
Advance received 500,000 85,000
Goods disposed pledged with bank 4,000,000 680,000
Return 540,000 (91,800)
- 5,048,147
Input tax
Input tax admissible 4,782,618
Sales tax credit brought forward 854,700
5,637,318
or 90 % of 5,048,147 4,543,332
(4,543,332)
Sales tax payable with return 504,815
Sales tax to be carried forward 1,093,986
Sales tax refundable on zero rated supplies 2,999,694
Input tax admissible to be apportioned

Purchases from registered persons 50,982,000 8,666,940
Apportionment of Input tax:
Taxable Supplies 29,734,980 4,782,618

Exports 18,650,000 2,999,694
Exempted goods 5,500,000 884,628
53,884,980 8,666,940

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.
Local purchases of raw-material: Rupees

from registered seppliers 23,000,000
from un-registered seppliers 9,000,000
Supplies of manufactured goods:
local taxable supplies to registered persons 12,000,000
local taxable supplies to un-registered persons 4,000,000
local exempt supplies to registered persons 3,000,000
exports to Malaysia 11,000,000

(i) Raw materials of Rs. 1.5 million were purchased from a registered supplier. Invoice was received on 15
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.
Solution: Mr. Zaheer

Computation of Sales tax
For the month of February 2016
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)
Supplies to un-registered persons U/S 3 ( 4,000,000 x 17%) 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
2% further sales tax on supplies to unregistered persons (N - 2) 80,000

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:

Supplies Residual input tax
Rs. Rs.
Supplies taxable to registered persons 12,000,000

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) 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.
Q.No. 7 Autumn 2013
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.
(i) Supplies made during the month were as follows:
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.

issued in this regard.
(iv) Following purchases were made during the month:

Rupees
Local materials from registered persons 27,000,000
Local materials from unregistered persons 3,000,000
(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:
On taxable supplies (N - 2) 3,641,097

Sales tax credit brought forward 850,280
(A) 4,491,377
90% of output tax(N - 3) (Rs.3,808,935 x 90%) (B) 3,428,042
Less: Admissible input tax: Lower of (A) or (B) 3,428,042

Balance sales tax payable for the period 380,894
Add: penalty 10,000
Total sales tax / penalty payable 390,894
2% further sales tax on supplies to un-registered persons (N - 4) 79,800
Sales tax carried forward [(A) - (B)] 1,063,336
Sales tax refundable on zero rated supplies (W-2) 948,903
(N - 1) Input tax
Input tax on Local purchases from registered persons (Rs. 27,000,000 x 17%) 4,590,000
(N - 2) Apportionment of input tax on taxable supplies

[U/R 25 of the Sales Tax Rules, 2006] Supplies Input tax
Rs. Rs.
Local taxable (Gross) 23,023,000 3,641,097
Exports 6,000,000 948,903

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.
Q.No. 7 (b) Spring 2013
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.
Local taxable supplies to registered persons U/S 3 26,860,000 4,566,200

Local taxable supplies to unregistered persons (Note - 2) 3,550,000 603,500
Zero rated supplies - local [U/S 4 read with 5th Schedule] -
Zero rated supplies - export [U/S 4 read with 5th Schedule] 1,250,000 -
Exports to Malaysia [U/S 4 read with 5th Schedule] 15,000,000 -
Total output tax 5,169,700
Less sales returns [U/S 9 read with Rule 22] 1,300,000 (221,000)
4,948,700
Input tax
Input tax apportioned to local taxable supplies (Working given) 4,818,479
Add sales tax credit brought forward 410,000
Total input (A) 5,228,479

90% of output tax (N - 1) (Rs. 4948,700 x 17%] (B) 4,453,830
Less: Admissible input tax: lower of (A) or (B) 4,453,830

Input tax on fixed assets (30,410,000 / 46,660,000 x 510,000) 332,385

2% further sales tax on supplies to un-registered persons (N - 2) 71,000
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
Input tax to be apportioned:

Purchases from registered persons
(Rs. 40,550,000 - Rs.60,000 = 40,490,000) x 17% 6,883,300
Purchases from unregistered persons [Rs. 5,000,000] (N - 3) -
Fixed assets (machine) [Rs. 3,000,000 x 17%] = (N - 1) 510,000
Total input tax to be apportioned 7,393,300
Apportionment of input tax of taxable supplies Supplies Input tax

[U/R 25 of the Sales Tax Rules, 2006] Rs. Rs.
Local supplies Allowable 30,410,000 4,818,479

Zero rated Refundable 16,250,000 2,574,821
46,660,000 7,393,300
(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.
Q.NO. 9 Autumn 2012
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
(i) Product A is exempt from the charge of sales tax

(ii) Sales tax credit brought forward from previous month amounted to Rs. 262,500.
(iii) Substandard supplies worth Rs. 150,000 were returned to the registered vendors and proper debit and credit notes were
issued.
(iv) A purchase invoice dated 5 February 2012 amounting to Rs. 100,000 had not been claimed inadvertently. This oversight
was detected in the month of August 2012.
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

(b) Input tax to be carried forward, if any
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
Less: Input tax allocated to taxable supplies (Note - 1) 86,633

Input tax brought forward from previous month 262,500
Total input tax 349,133
Input tax to be carried forward (160,433)
(b) Sales tax refundable on export sales U/S 10(1) (Note - 1) 507,311
(Note -1) Apportionment of residual input tax

[U/R 25 of the Sales tax Rules, 2006] Supplies Residul input
tax
Rs. Rs.
Local taxable supplies (Product B) 1,110,000 86,633
Local exempt supplies (Product A) (Note - 3) 5,350,000 417,556
Exports (zero rated) 6,500,000 507,311
12,960,000 *1,011,500
* 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.
Q.NO. 6 Autumn 2011
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:
(i) Supplies made during the month were as follows:

Rupees
Local taxable supplies to registered persons 35,500,000
Local taxable supplies to unregistered persons 1,700,250
Exports to USA and Canada 25,500,000
Supplies of exempt goods 5,235,000
Goods worth Rs. 1,500,000 were returned by a registered person. Proper debit/credit notes have been issued in
this regard.
(ii) Following purchases were made during the month:

Rupees
Purchases from registered persons 54,550,000
Purchases from unregistered persons 10,600,000
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
Input tax to be carried forward (A) Less (B) 148,414

Sales tax refundable in respect of exports U/S 10(1) (Note - 1) 3,433,019
Input tax to be apportioned:

Purchases from registered persons (Rs. 54,550,000 x 17%) 9,273,500
Purchases from unregistered persons (Note - 4) -
Less : sales tax inadmissible U/S 73 (Note - 5) (127,500)
Total input tax to be apportioned 9,146,000
(Note - 1) Apportionment of residual input tax Supplies Residul input

[U/R 25 of the Sales tax Rules, 2006] tax
Rs. Rs.
Local supplies 37,200,250 5,008,202
Exports 25,500,000 3,433,019
Exempt supplies (Note - 6) 5,235,000 704,779
67,935,250 9,146,000
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.
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.
Q.NO. 5 Spring 2011
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
Following additional information is also available.

(i) Purchases from registered suppliers include an amount of Rs. 1.0 million which was invoiced on May 15, 2010. The
input tax on this invoice could not be claimed in the relevant period.
(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.
All the above amounts are exclusive of sales tax.
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 -
Input tax attributable to both taxable and exempt goods 2,448

Less: Inadmissible / un-adjustable input tax (Note - 1) (1,174)
Input tax for the month 1,274
Add previous month credit brought forward 50
Accumulated credit 1,324
Sales Tax Debit (output tax)
Domestic supplies of manufactured goods:

− to registered persons U/S 3 10,000 1,700
− to unregistered persons U/S 3 (Note - 2) 3,000 510
− Export to Taiwan [U/S 4 read with 5th Schedule] 10,000 -
− Exempt goods [U/S 13 read with 6th Schedule] 2,000 -
Parts provided to the CEO U/S 3 15 3
Output tax for the month 2,213
Less: Sales return [U/S 9 read with Rule 22] 500 85

Debit for the month 2,128

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
Less: Admissible input tax: lower of (A) or (B) 1,112

Input portion related to fixed assets used on taxable supplies without 90% limitation 212
Balance sales tax payable 804
Sales tax refund on export sales U/S 10(1) (Note - 1) 979
(Note - 1) Apportionment of residaul input tax

[U/R 25 of the Sales Tax Rules, 2006]
Rs. in ‘000
Total residual input tax 2,448
Allocation of residual input tax

[U/S 25 of the Sales Tax Rules, 2006] Residual input tax
Rs. Rs.
Taxable supplies 13,015 1,274

Exempt supplies (Note - 4) 2,000 196
Zero rated supplies 10,000 979
25,015 2,448
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 - 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.
applicable.
Q.NO. 6 Autumn 2010
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
Other relevant information is as follows:
(i) All the above amounts are exclusive of sales tax.
(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%.
Required: Compute the following for the month of August 2010:

(a) Sales tax payable / refundable. (b) Input tax credit to be carried forward, if any.
Solution
Rs. in '000' Rs. in '000' Rs. in '000'
SALES TAX CREDIT (INPUT TAX) Taxable value Sales tax Sales tax
On domestic supplies (manufactured goods U/S 3) 22,000 22,000 3,740

On exempt goods [U/S 13 read with 5th Sche.] 3,000 3,000 -
On supplies of imported goods U/S 3 14,000 14,000 2,380
On exports [U/S 4 read with 5th Schedule] 5,000 5,000 -
6,120
INPUT TAX
Commercial imports @ 20% (10,000 x 1.15) 11,500 2,300

Imports for domestic consumptions @ 17% 17,000 2,890
Local purchases @ 17% 8,000 1,360
Less: Inadmissible import & exempt supplies (Note - 1) (1,133)
Input tax for the month 5,417
Previous month credit brought forward 365
Accumulated credit (A) 5,782
90% of output tax (Rs. 6,120 x 90%) (B) 5,508
Less: Admissible input tax: Lower of (A) or (B) 5,508

Balance sales tax payable (Rs. 6,120 - Rs. 5,508) 612
Sales tax credit carried forward (A) less (B) 274
Sales tax refundabe on export sales U/S 10(1) (Note - 1) 708
(Note - 1) Apportionment of residual input tax Supplies Residual input tax

[U/R 25 of the Sales tax Rules, 2006] Rs. Rs.
Imports for domestic consumption 17,000 2,890

Local purchases 8,000 1,360
25,000 4,250
Total sales other than sales of commercial goods 30,000
Inadmissible input tax

Exempt supplies (3,000 / 30,000 x 4,250) 425
Exports (5,000 / 30,000 x 4,250) (Note - 3) 708
1,133
(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.
Act, 1990.
Q.NO. 8 Spring 2010
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

Local sales of exempt manufactured goods 20

Taxable supplies – manufactured goods 120
Taxable supplies – commercial imports 60
Purchases
Local purchases of raw material from:
Registered persons 160

Unregistered persons 50
Commercial imports 40
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
Sales tax refundable on exports U/S 10(1) (Note - 1) 4,800,000
Input tax:
Input tax on purchases from registered persons (Rs. 160,000,000 x 17%) 27,200,000
27,200,000

Rs. Rs.
Taxable local supplies 120,000,000 19,200,000
Exports 30,000,000 4,800,000
Exempt supplies (Note - 3) 20,000,000 3,200,000
170,000,000 27,200,000
Act, 1990.
Q. No. 8(b): Autumn 2009
Mr. Asif is registered under the Sales Tax Act, 1990. Following information for August 2009 month has been extracted from
his business records:
i. Supplies made during the month were as follows:

Rupees
To unregistered persons 3,000,000
Export supplies 11,000,000
Exempted supplies 2,000,000

ii. Goods costing Rs.8,000,000 were purchased from registered persons.

iii. Goods purchased from unregistered persons amounting to Rs.2,000,000 and were used exclusively for making
taxable supplies.
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

Rs. Rs.
Output tax U/S 3 (Rs. 8,000,000 x 17%) (Note - 2) 1,360,000
Less: input tax against taxable local supplies (Note - 1) 518,095
Balance sales tax payable 841,905
Sales tax refundable on exports U/S 10(1) (Note - 1) 712,381
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
21,000,000 1,360,000
Act, 1990.
Q.NO.8 Spring 2009

Mr. Azad is a registered person and engaged in the manufacture of consumable goods. The following for the month of
February 2009 is available:
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

Sales tax liability: Rs. Rs.
Output tax 1,020,000

Input tax against taxable local supplies (Note - 1) (A) 938,400
90% of output tax (Rs.1,020,000 x 90%) (Note - 3) (B) 918,000
Less admissible input tax: lower of (A) or (B) 918,000
Input tax on fixed assets ( 289,000 x 6,000,000 / 10,000,000 )

(Restriction of 90% of output tax is not applicable, therefore considered separately) 173,400
Excess input tax paid c/f (71,400)
Sales tax credit carried forward (A) less (B) 20,400
Input tax:
Input tax on raw material 1,564,000
1,564,000

Rs. Rs.
10,000,000 1,564,000
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.
Q.NO. 8 Spring 2007:
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.
iii. Following purchases were made during the month:
- From registered persons 45

- From unregistered persons 15
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.
vi. Mr. Adam is also required to pay the following:

Rupees
Arrears 500,000
Surcharge 70,000
Penalty 30,000
Compute Mr. Adam’s sales tax liability.
Solution


Less: credit note adjustment [U/S 9 read with Rule 22] (Rs. 500,000 x 17%) 85,000
5,865,000
Input tax (Note - 1) 2,818,421
3,046,579
Arrears 500,000
Surcharge 70,000
Penalty 30,000
Payable 600,000
Sales tax payable 3,646,579
Sales tax refundable on exports U/S 10(1) (Note - 1) 4,026,316
Input tax:
Input tax (45,000,000 x 17%) 7,650,000
7,650,000

Rs. Rs.
Taxable local supplies 35,000,000 2,818,421

Exports 50,000,000 4,026,316
95,000,000 7,650,000
Act, 1990.
Q.NO. 12 Autumn 2005
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.
Required: Determine the amount of sales tax liability.
Solution
Sales tax liability: Sales tax

Rs. Rs.
90% of output tax (Rs.1,105,000 x 90%) (A) 994,500


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

Rs. Rs.
Exports 3,000,000 189,429
10,500,000 663,000
Act, 1990.
Q.NO.10 Spring 2004
Following is the pertinent data relating to sales tax return of the company:
Output tax
Input tax Tax at the rate Further tax at the

claimable of 15% rate of 3% u/s 3(IA)
Rupees Rupees Rupees
Jul-03 1,050,000 1,210,000 310,000
Aug-03 1,450,000 1,175,750 150,000
Sep-03 1,130,000 1,375,000 225,000
Oct-03 1,200,100 1,300,750 175,050
Nov-03 1,050,000 1,250,700 210,000
(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%.
(a) September August July

Output tax (A) 1,375,000 1,175,750 1,210,000
Actual Input tax 1,130,000 1,450,000 1,050,000

Input tax brought forward 391,825 - -
Total input tax (B) 1,521,825 1,450,000 1,050,000
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.
Q. NO. 9 Spring 2003
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
Sales tax liability: Sales tax

Rs. Rs.
90% of output tax (Rs.1,120,000 x 90%) (B) 918,000
Sales tax refundable against exports u/s 10(1) (Note - 1) 276,250
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

Rs. Rs.

Exports 2,500,000 276,250

Exempt supplies (Note - 3) 500,000 55,250
9,000,000 994,500
Act, 1990.

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Electricity bill - - 170,000

Q.NO.7 Spring 2015

Following additional information is also available:

Conceptual Approach to Taxes_______________________________________________ _____________________________697

Sales tax refundable 248,395

Apportionment of Input tax

698 Conceptual Approach to Taxes

Following additional information is also available:

Ali Trading Corporation

Output Tax Rs. Rs.

Local supplies to wholesalers 14,500,000 2,465,000

Sales tax to be carried forward 1,093,986

Sales tax refundable on zero rated supplies 2,999,694

Input tax admissible to be apportioned

Apportionment of Input tax:

Taxable Supplies 29,734,980 4,782,618

Conceptual Approach to Taxes_______________________________________________ _____________________________699

Local purchases of raw-material: Rupees

Following additional information is also available:

Solution: Mr. Zaheer

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

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

90% of output tax (N - 1) (Rs. 2,720,000 x 90%) (C) 2,264,400

700 Conceptual Approach to Taxes

Sales tax carried forward [B less C] 1,156,933

Working of residual input tax:

Purchase from regitered person ( 23,000,000 x 17 %) 3,910,000

APPORTIONMENT OF RESIDUAL INPUT TAX:

Supplies taxable to registered persons 12,000,000

Q.No. 7 Autumn 2013

(i) Supplies made during the month were as follows:

Conceptual Approach to Taxes_______________________________________________ _____________________________701

issued in this regard.

(iv) Following purchases were made during the month:

On taxable supplies (N - 2) 3,641,097

90% of output tax(N - 3) (Rs.3,808,935 x 90%) (B) 3,428,042

Less: Admissible input tax: Lower of (A) or (B) 3,428,042

Sales tax carried forward [(A) - (B)] 1,063,336

Sales tax refundable on zero rated supplies (W-2) 948,903

(N - 2) Apportionment of input tax on taxable supplies

702 Conceptual Approach to Taxes

Q.No. 7 (b) Spring 2013

Following additional information is also available:

Local taxable supplies to registered persons U/S 3 26,860,000 4,566,200

Total input (A) 5,228,479

Conceptual Approach to Taxes_______________________________________________ _____________________________703

Input tax on fixed assets (30,410,000 / 46,660,000 x 510,000) 332,385

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