Sales Tax Workbook by TT the Taxman CAF-2 Tax Practices

SALES TAX WORKBOOK

PREPARED BY
SIR TARIQ TUNIO
Unit -1
Basics & Sales Tax on Retail Price

A. BASICS OF SALES TAX

1. TAX PERIOD

Tax period means

- a period of _____________________

- or such other period as Board may specify in NOG (with approval of Fed Minister-in-
Charge)

NOG = Notification in official gazette

2. DUE DATE

Filing of Return ________ of the following month

Payment of Tax ________ of the following month

3. GOODS vs. SERVICES

- Sales tax on goods is ____________________ domain

- Sales Tax on services is __________________ domain

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Sales Tax Workbook by TT the Taxman CAF-2 Tax Practices

4. INDIRECT TAX

- Sales tax is an indirect tax

- A tax is indirect if the person paying the tax to the government shifts its burden to the
buyers.

5. CONSUMPTION TAX

- Sales tax taxes the consumption

B. SALES TAX ON RETAIL PRICE

(1) Method 1 of Sales Tax

Who is liable to pay?

At what rate?

Of what Value?

Of what Goods?

Procedural Requirements Retail price along with sales tax amount shall be
legibly, prominently and indelibly printed or
embossed by manufacturer/ importer on each
article, packet, container, package, cover or label

(2) Goods Listed in the 3rd Schedule

1) Fruit juices and vegetable juices 17) Shoe polish and shoe cream
2) Ice cream 18) Cement sold in retail packing
3) Aerated waters or beverages. 19) Mineral/Bottled water
20) Household electrical goods, including
- air conditioners
- refrigerators
- deep freezers
- televisions
- recorders and players
4) Syrups and squashes.
- electric bulbs
- tube-lights
- electric fans
- electric irons
- washing machines and
- telephone sets
5) Cigarettes. 21) Household gas appliances, including
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- cooking range
- ovens
- geysers and
- gas heaters
22) Foam or spring mattresses and other foam
6) Toilet soap
products for household use.
23) Paints, distempers, enamels, pigments, colours,
varnishes, gums, resins, dyes, glazes, thinners,
7) Detergents
blacks, cellulose lacquers and polishes sold in retail
packing
24) Lubricating oils, brake fluids, transmission fluid,
8) Shampoo
and other vehicular fluids sold in retail packing.
25) Storage batteries excluding those sold to
9) Toothpaste
automotive manufacturers or assemblers
26) Tyres and tubes excluding those sold to
10) Shaving cream
automotive manufacturers or assemblers
11) Perfumery and cosmetics 27) Motorcycles
12) Tea 28) Auto rickshaws
13) Powder drinks 29) Biscuits in retail packing with brand name
14) Milky drinks 30) Tiles
31) Auto-parts, in retail packing, excluding those
15) Toilet paper and tissue paper
sold to automotive manufacturers or assemblers
16) Spices sold in retail packing
bearing brand names and trade
marks

(3) Goods listed in 3rd Schedule, if also listed in 8th Schedule, are chargeable to tax at rate provided
in 8th Schedule (lower rates).

PRACTICE QUESTIONS

QUESTION -1 ALI

Mr. Ali is registered under Sales Tax Act, 1990. He is engaged in manufacture and supply of third
schedule goods. Following information has been extracted from his record for January 2022.

Sales
Supplies of goods listed in 3rd Schedule 100 KG

Further information:

- Goods are sold to distributors at wholesale price Rs. 5000/- per kilo gram, whereas their retail
price is Rs. 8000/- per kg.

Requirement: Calculate sales tax liability of the registered person for January 2022.

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Sales Tax Workbook by TT the Taxman CAF-2 Tax Practices

QUESTION -2 MAHREEN

Ms. Mahreen is registered under Sales Tax Act, 1990. She is engaged in import and supply of third
schedule goods. Following information has been extracted from her record for January 2022.

Sales
Supplies of imported goods to dealers/distributors Rs. 12,00,000

Further information:

- Goods sold to dealers/distributors were sold to general public at retails, which came to Rs.
16,450,000/-

Requirement: Calculate sales tax liability of the registered person for January 2022.

QUESTION -3 KAMAL

Mr. Kamal is registered under Sales Tax Act, 1990. He is distributor of 3rd Schedule goods, purchased from
various manufacturers. Following information has been extracted from his record for the month of
January 2022.

Purchases
Goods purchased from manufacturer (Units) 10,000
Per unit price Rs. 850
Sales
Supplies of goods to retailers (Units) 9,500
Per unit price Rs. 1000

Further information:

- Goods are supplied to end consumers at retail price of Rs. 1,350/-

Requirement: Calculate sales tax liability of the registered person for January 2022.

MORE PRACTICE

QUESTION -4 KAMRAN

Mr. Kamran is registered under Sales Tax Act, 1990. He is engaged in manufacture and supply of third
schedule goods. Following information has been extracted from his record for January 2022.

Sales
Supplies of 3rd Schedule goods 100,000 Units

Further information:

- Per unit price of goods is Rs. 300/-

- Goods are sold to consumer at retail price is Rs. 500/-.

Requirement: Calculate sales tax liability of the registered person for January 2022.
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Sales Tax Workbook by TT the Taxman CAF-2 Tax Practices

QUESTION -5 BABUR

Mr. Babur is registered under Sales Tax Act, 1990 as importer of third schedule goods. Following
information has been extracted from his record for January 2022.

Sales
Supplies of imported goods to dealers/distributors Rs. 12,00,000

Further information:

- Goods sold to dealers/distributors were sold to general public at retails, which came to Rs.
16,450,000/-

Requirement: Calculate sales tax liability of the registered person for January 2022.

QUESTION -6 TAHIR

Mr. Tahir is registered under Sales Tax Act, 1990. He is dealer/distributor in the name and style of M/s
Tahir Sons. He purchases 3rd Schedule goods from the manufacture M/s AZ Enterprises. Following
information has been extracted from the record of M/s Tahir Sons for January 2022.

Purchases
Goods purchased from manufacturer (Units) 50,000
Per unit price Rs. 1000
Sales
Supplies of goods to retailers (Units) 35,000
Per unit price Rs. 1,200

Further information:

- Goods are supplied to end consumers at retail price of Rs. 1,500/-

Requirement: Calculate sales tax liability of the registered person for January 2022.

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Sales Tax Workbook by TT the Taxman CAF-2 Tax Practices

Unit -2
Sales Tax in VAT Method

Student’s Noting

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Sales Tax Workbook by TT the Taxman CAF-2 Tax Practices

PRACTICE QUESTIONS

QUESTION -7 NAWAZ

Mr. Nawaz is registered under Sales Tax Act, 1990. Following information has been extracted from his
record for the month of January 2022.

SUPPLIES
- Supplies of taxable goods Rs. 8,200,000
PURCHASES
- Local purchases of raw material 5,000,000
- Local purchase of packing material 500,000

Requirement: Calculate sales tax liability of Mr. Nawaz for January 2022

KEY POINT OF SALES TAX NUMERICAL QUESTION

(1) DOUMENTS REQUIRED TO CLAIM INPUT TAX

LOCAL PURCHASE

IMPORTS

AUCTION (BY GOVT)

(2) IMPOTS

Student’s Noting KEY POINTS

- Imports is purchases
- Input tax is paid on goods imported by
importer/buyer
- Input tax is paid directly to Govt.
ADVANCED POINTS
- Imports for in-house
use/manufacturing, rate 17%
- Commercial imports, rate 17% plus
value addition tax 3%

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(3) TYPS OF SUPPLY & ALLOCATION/APPORTIONMENT

 There are two types of supply

(1) ____________ Supply

(2) ____________ Supply

 Taxable supply is of two types:

(1) ____________ Supply (, which is also called normal taxable supply)

(2) ____________ Supply

 There are two stage of deduction of input tax:

(1) _____________

(2) _____________

 Allocation

Input tax paid in relation to purchases used in making taxable supply is _______________

Input tax paid in relation to purchases used in making zero-rated supply is _____________

Input tax paid in relation to purchases used in making exempt supply is _______________

 Apportionment

Input tax paid in relation to purchases used in making both taxable & exempt supply (called
‘residual input tax’) is _______________ on the basis of following formula:

Residual Input Tax X Type of Supply/Total Supplies

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Sales Tax Workbook by TT the Taxman CAF-2 Tax Practices

PRACTICE QUESTIONS

QUESTION -8

Raw Material 1 200,000 Product X 450,000

Raw Material 2 320,000 Product Y 600,000
Raw Material 3 280,000 Product Z 500,000

Further Information:

- RM-1 is exclusively used in making Product X which is taxable supply.

- RM-2 is exclusively used in making Product Y which is zero-rated supply.
- RM-3 is exclusively used in making Product Z which is exempt supply.

Required: Calculate Sales Tax Liability

QUESTION -9

Raw Material 1 200,000 Product X 450,000

Raw Material 2 320,000 Product Y 600,000
Raw Material 3 280,000 Product Z 500,000
Packing Material 100,000

Further Information:

- RM-1 is exclusively used in making Product X which is taxable supply.

- RM-2 is exclusively used in making Product Y which is zero-rated supply.
- RM-3 is exclusively used in making Product Z which is exempt supply.

Required: Calculate Sales Tax Liability

QUESTION -10 HURRY PUTTAR

Mr. Hurry Puttar is registered under Sales Tax Act, 1990. Following information has been extracted from
his records for the month of August 2022.

Purchases
Local purchase of Taxable goods 4,000,000
Imports 2,000,000
Supplies
Supplies of taxable goods 4,500,000
Supplies of zero rated goods 2,800,000
Exmpt Supplies 3,000,000

Required: Calculate Sales Tax Liability for the month of August 2022.

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(4) RESTRICTION ON INPUT TAX EQUAL TO 90% OF OUTPUT TAX

Admissible input tax is:

Total amount of input tax or Input Tax equal to ____% of output tax, whichever is Lower

Exception: This restriction is not applicable to input tax relating to purchase of capital goods/fixed
assets.

PRACTICE QUESTIONS

QUESTION -11 KALA ANGREEZ

Mr. Kala Angreez is registered under Sales Tax Act, 1990. Following information has been extracted from
his records for the month of August 2022.

Purchases
Local purchase of Taxable goods 910,000
Imports of raw material 450,000

Supplies
Supplies of taxable goods 1,200,00
Supplies of zero rated goods 400,000
Exempt Supplies 210,000

Required: Calculate Sales Tax Liability for the month of August 2022.

(5) EFFECT OF REGISTRATION

To claim input tax a person himself/itself must be a ___________ person, and he should have made
purchased from a registered _____________.

Registered Persons Unregistered Persons

Purchases from

Supplies to

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ICAP PAST PAPER PRACTICE

QUESTION -12 MR ASIF (ICAP Sept. 2009, Q.08(b))

Mr. Asif is registered under the Sales Tax Act, 1990. Following information for the month of August
2009 has been extracted from his business records:

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

Rupees
- to registered persons 5,000,000
- to unregistered persons 3,000,000
- export supplies 11,000,000
- exempt supplies 2,000,000

(ii) Goods costing Rs. 8,000,000 were purchased from registered persons.
(iii) Goods purchased from unregistered persons amounted 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. (March 09)

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