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The document provides financial information for Mehrban Associates (MA) for August 2021, detailing their purchases, supplies, and additional information relevant to sales tax calculations. It outlines the taxable and exempt goods, fixed asset purchases, and sales tax credits, while requiring the computation of sales tax payable or refundable and any input tax to carry forward. The sales tax rate applicable is 17%, and the document emphasizes adherence to the Sales Tax Act, 1990.

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4 views1 page

Questions

The document provides financial information for Mehrban Associates (MA) for August 2021, detailing their purchases, supplies, and additional information relevant to sales tax calculations. It outlines the taxable and exempt goods, fixed asset purchases, and sales tax credits, while requiring the computation of sales tax payable or refundable and any input tax to carry forward. The sales tax rate applicable is 17%, and the document emphasizes adherence to the Sales Tax Act, 1990.

Uploaded by

nasringulln
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Principles of Taxation Page 5 of 6

Q.7 Mehrban Associates (MA) is registered under the Sales Tax Act, 1990. MA is engaged in
the business of manufacturing and supplying of various consumer goods. Following
information is available from MA’s records for the month of August 2021:

Rupees
Purchases
Taxable goods from registered persons 4,960,000
Taxable goods from unregistered persons 1,400,000
Exempt goods from unregistered persons 520,000

Supplies
Taxable goods to registered persons 8,650,000
Taxable goods to unregistered persons 1,560,000
Exempt goods to local unregistered persons 1,740,000
Export of taxable goods to UAE 1,300,000
Export of exempt goods to UAE 1,900,000

Additional information:
(i) Taxable goods from registered persons include:
 materials worth Rs. 296,000, which were exclusively used for manufacturing
exempt supplies.
 materials worth Rs. 675,000, which were exclusively used for manufacturing
export related goods.
 goods worth Rs. 150,000 which were purchased in cash from a supplier.
 500 kg of tea purchased at a cost of Rs. 360,000 in one kg packing, covered under
Third Schedule. Retail price of tea per kg is Rs. 900. By end of August 2021,
300 kg were supplied to an unregistered wholesaler at a price of Rs. 790 per kg.

(ii) Taxable goods supplied to unregistered persons include goods worth Rs. 320,000
which were sold to a customer who did not provide his CNIC or NTN details. These
goods were purchased from a registered supplier for Rs. 275,000 during August 2021.

(iii) Following fixed assets were purchased during the month of August 2021:
Fixed assets Purchase cost (Rs.) Usage
To ensure quality standards of
Machine A 2,000,000
packing for exports
To manufacture taxable (local)
Machine B 3,000,000
as well as exempt (local) goods
Furniture and fittings 1,000,000 To use in office premises
(iv) Electricity bill of Rs. 959,450 was paid in cash. The bill was inclusive of sales tax of
Rs. 154, 250.
(v) Sales tax credit brought forward from last month amounted to Rs. 1,137,580.
(vi) Input tax of Rs. 186,000 pertaining to purchase made on 1 February 2021 was
inadvertently remain unclaimed.

All the above figures are exclusive of sales tax, except where it is specified otherwise. Sales
tax is payable at the rate of 17%.

Required:
In the light of the provisions of the Sales Tax Act, 1990 and Rules made thereunder,
compute the amount of sales tax payable by or refundable to MA and input tax to be
carried forward, if any, for the tax period August 2021. (Show all relevant exemptions,
exclusions and disallowances) (17)

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