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I have started working in an audit firm and I am currently verifying vouchers at client. I have seen two treatments of sales tax by the accountant.

1) He withholds the total amount of sales tax charged (eg: 17%) and pays the remainder to the vendor.

2) Or either he withholds 1/5 of the sales tax charged (eg: 17% *1/5) and pays the remainder to the vendor.

I asked for any supporting evidence regarding his two different treatments but he failed to mention any rules or sections supporting his treatment.

Kindly advise which treatment is correct 1 or 2 and under what sections are these sales tax rules mentioned in the sales tax act.

Regards,
According to the Sales Tax special procedure withholding rule, every company is responsible to withhold 1/5 of sales tax amount and deposit to the Goverment treasure on supplier behalf it is also part of law if supplier of the goods is un-registered 17%
will be witho
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