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    Test 10 Solution

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    The document provides the solution to a tax practice test with two answers. Answer 1 calculates sales tax payable as Rs. 5.66 after considering output tax, input tax, and further tax on unregistered sales. It also provides calculations for input tax and taxable sales. Answer 2 discusses the time of supply for different scenarios and explains that short paid tax can be recovered without notice by stopping goods removal or attaching bank accounts, but penalty requires a show cause notice.

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    Test 10 Solution

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    13 views2 pages
    The document provides the solution to a tax practice test with two answers. Answer 1 calculates sales tax payable as Rs. 5.66 after considering output tax, input tax, and further tax on unregistered sales. It also provides calculations for input tax and taxable sales. Answer 2 discusses the time of supply for different scenarios and explains that short paid tax can be recovered without notice by stopping goods removal or attaching bank accounts, but penalty requires a show cause notice.

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    The document provides the solution to a tax practice test with two answers. Answer 1 calculates sales tax payable as Rs. 5.66 after considering output tax, input tax, and further tax on unregistered sales. It also provides calculations for input tax and taxable sales. Answer 2 discusses the time of supply for different scenarios and explains that short paid tax can be recovered without notice by stopping goods removal or attaching bank accounts, but penalty requires a show cause notice.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    13 views2 pages

    Test 10 Solution

    Uploaded by

    ls786580302
    The document provides the solution to a tax practice test with two answers. Answer 1 calculates sales tax payable as Rs. 5.66 after considering output tax, input tax, and further tax on unregistered sales. It also provides calculations for input tax and taxable sales. Answer 2 discusses the time of supply for different scenarios and explains that short paid tax can be recovered without notice by stopping goods removal or attaching bank accounts, but penalty requires a show cause notice.

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    CAF-02 Tax Practices Test-1 Solution

    Test 10 – Suggested Solution


    Answer-1
    Confidence Engineering
    Computation of Sales Tax payable/Refundable
    For the Tax period February 2023
    Output tax 46.98
    Less: Input tax (lower of)
    -Actual input tax 51.52
    -Add: b/f input 27.00 78.52
    -90% of output (46.98x90%) 42.28 (42.28)
    4.7
    Add: Add: Further tax @ 4% on un-registered sales (24 x 4%) 0.96
    Payable 5.66

    Input tax to be carried forward (78.52-42.28) 36.24

    Calculation of input tax Rs. in million

    Wires and cables (6x18%) 1.08


    Taxable goods from remaining registered persons (332 x18%) 59.76
    Purchases from cottage industry -
    Purchases from remaining unregistered person -
    Raw material given to the factory engineer (2 x 18%) a (0.36)
    Raw material destroyed by fire (25 x 18%) (4.5)
    Purchase return within 180 days (26 x 18%) (4.68)
    Electricity bill (1.2 x 18%) 0.22
    51.52

    Calculation of taxable sales Rs. In million

    To Registered Customer:
    Supplies under warranty period -
    Goods withdrawn by owner for personal use 4
    Raw material given to factory engineers -
    Sales to Pray Traders 32
    Remaining sales to registered person (220-5-4-2-32) 177
    Sales to a cottage industry 16
    Invoice dated 15 July 2022 8
    Sales Return (lapse of 180 days) -
    237

    To Unregistered Customer
    Remaining sales to unregistered person 24
    261
    Tax@18% 46.98

    1
    CAF-02 Tax Practices Test-1 Solution
    b)
    (i) Input tax on purchases from unregistered person including cottage industry shall not be allowed.
    (ii) The ‘sale price’ of the product sold includes the cost of parts, if any, to be supplied during the warranty
    period, therefore it is not considered as a ‘separate supply’ and hence no sales tax is chargeable at the
    time of disposal of ‘parts’ to meet the warranty claim.
    (iii) Putting to private use of raw material is not a supply and therefore it is not chargeable to tax.
    (iv) The adjustment on account of sale return credit can only be claimed if credit note is issued within 180 days
    of the relevant supply. Therefore, no tax credit will be available to CE.

    Answer-2
    a)
    Time of supply Reasons
    (i) November 2022 Time of supply in relation to the supply of goods under a hire purchase is the
    time at which the agreement is entered into.
    (ii) March 2023 Time of supply is the period in which goods are delivered.
    (iii) July 2022 Time of supply is the time when goods are available to the recipient of the
    supply irrespective of their use.
    (iv) September 2022 Time of supply is the time when goods are available to the recipient for the
    supply irrespective of actual delivery.

    b)
    Short paid amounts recoverable without notice –
    Where a registered person pays tax less than indicated in his return, the short paid tax (including default surcharge)
    shall be recovered from him:
    • by stopping removal of goods from business premises and
    • through attachment of business bank accounts
    without giving him a show cause notice.
    However penalty will be imposed after issuing show cause notice.

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