Input adjustment zero rate

[Information Consultant]

Dear Forum Member

We are registered as a manufacturer and exporter and have a Textile unit . Can we claim input adjustment ( 17 % ) against 4 % output tax charge to unregisterd supplier?

[Anfal Shabbir]

Dear Members

if u are selling to unregistered persons, than u are not eligible to adjust input tax, the input tax should be charged to the cost

I am submitting herewith the practical example of point 2 of clarification of SRO 283

PARTICULARS VALUE TAX
sales to RP 1000 0
sales to URP 1000 40


PURCHASE 588 100

NOW WE WILL COMPUTE ADMISSIBLE INPUT
100/2000 X 1000

ADMISSIBLE INPUT IS 50/-

NOW WE ADJUST RS.50/- AS INPUT TAX AND CLAIM RS.10 AS REFUND, THE INADMISSIBLE INPUT TAX RS.50 WILL BE ADDED IN THE COST OF SALES TO URP

I HOPE THAT THE ABOVE EXAMPLE WILL CLARIFY THE POINT

BEST REGARDS

ANFAL SHABBIR

[Information Consultant]

thanks

[Information Consultant]

Dear Forum member
As per my understanding output tax charges to unregisterd supplier @ 4 % is not adjustable against input tax @ 17 % .
It is evident from April 2011 return that 4 % output tax is adjustable against 17 % input tax and col no 22 shows the diff of output and input.
Should I deposit the diff amnt in the next month or follow the same practise and prepeare a sales tax challan full amount of 4% without input adjustment. I need ur comments.

[wasim akram]

NO NEED TO DEPOSIT TAX ON ACCOUNT OF 4% OR 6%. MOST OF THE RP HAS NOT DEPOSITED TAX AND FOLLOW THE RETURN AS USUAL. IT IS THE BASIC RIGHT OF THE ASSESSEE TO ADJUST ITS PAYABLE AGAINST RECEIVEABLE AMOUNT. IF DEPARTMENT RESIST AND SERVE NOTICE OF PAYMENT OF TAX iT WILL DIRECTLY BE CHALLANGED IN THE HIGH COURT. DEPARTMENT WOULD HAVE TO ADJUST BECAUSE IT IS THE FUNDAMENTAL RIGHT OF THE ASSESSEE

[Anfal Shabbir]

Dear Information Consultant and Wasim

The apprehension of waseem is wrong, SRO 283 specifically disallow input tax against sales @ 4% and 6%,

in the sales tax return there is a column 4 inadmissible input tax
write the sales tax input amount excluding paid on utilities in that column and your liability will arise

also note that input tax paid on utilities is only adjustable against sale to unregistered persons

Regards

Anfal Shabbir

[Information Consultant]

Dear Anafal
Pls clarify the col 24 a recently add in Sales tax return . It assumes that we adjust our input tax against 4 % output tax charge to unregisterd person and claim net refund and in case of 4 % is > than 17 % input tax we will submit the difference amount .

[Sajjad R1]

salam dear
Its a rule in case of zero rated supplies the reg person can claim for input tax but in case of exmpted supplies the reg person cannot claim for input tax