S. Tax (input)

Question 1

input tax disallowance

Answer 1

11 conditions

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Following goods supplied by Reg. person to unregistered (I/P of reg. shall be disallowed)

• filter rods for cigarettes
• A/C, chilling, humidification PLANTS
• Cranes
• storage tanks, gas separaters, heat exchangers
• artificial filament tow
• polypropylene granules

Question 2

90% Input Tax Restriction Impact &

Treatment

Answer 2

• Lower Profit Margin - Pay 10% of Output to FBR
• Input (Purchases) more than O/P due to reasons
  
  • Overbuying (closing stock)
  • Loss
• Not entitled to refund rather paying 10% of O/P to FBR

Question 5

What happens to Un-adjusted Input carried forward (due to 90 pc rest)

Direct Addition to next month’s Input?

How long C/F

Answer 5

e.g C/F from Jan to Feb - not to be added to Feb’s Input directly

1st calc. claimable I/P of Feb (i.e.after apportionment of Feb)

Procedure in Jan

1. separate perm. disallowance (e.g cash payment, unreg. gifts, assets)
2. Apportion b/w exempt, zero, other…….exempt separate, zero for refund appl.blance other is claimable.
3. Make two portions Fixed Assets & Other
4. Apply 90% rest w.r.t - others. (No restriction of 90% for Fixed Assets)
5. C/F to Feb
6. In Feb perform steps_1-3_ and calc claimable I/P tax; add C/Forwarded claimable of Jan
7. Apply 90% test to Other than Fixed Assets(Jan C/F+Feb claimable) - C/F excess

Question 6

Input Tax Restriction (90%)

Q & A

Answer 6

Question 7

How long to C/F unadjusted claimable I/P

Answer 7

Reason - overbuying/closing stock - Automatic adjustment once sold in coming months

Reasong - low profit margins - 180D - Application & Procedure

Question 8

Difference between Wholesaler - Distributor - Wholesaler-cum-distributor

Answer 8

Key Important Points

• No restriction (90%) for Dist & wholesale-cum Ret. but restriction (90%) for wholesaler.
• Minimum margin for W/S 10% - otherwise C/F & Cash flow remain invested/stuck
• Dist vs wholesaler ———Area specific & comission
• wholesale cum retailer —-Import, supply to both wholesale & retail

Question 9

90% Restriction & Fixed Assets

Answer 9

• Fixed Asset ? Machinery & Fiscal Cash Register
• 90% restriction does not apply
• Make two portions of Input……FA & Others
• Apportion
• First deduct others and apply 90% test
• Then deduct FA I/P (Liability may be reduced less than 10%)

Question 11

Sec 73 Payment

Answer 11

Question 12

Residual Tax Apportionment Rules

Answer 12

Chap IV of Sales Tax Rules 2006