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Sales tax on value addition not adjustable

KARACHI (August 15 2004): The Central Board of Revenue (CBR) has announced that the sales tax paid on value addition by a commercial importer is not adjustable as input tax unless it is paid in excess of 10 percent.

The ruling has been made by the Secretary (ST-L&P) CBR after it received a number of queries that the registered persons are facing problems in calculation of carry forward as required under column 12 and 13 of the Special Return-cum-Payment Challan for the commercial importers.

The ruling followed receipt by the CBR a number of queries that the registered persons are facing problems in calculation of carry forward as required under column 12 and 13 of the Special Return-cum-Payment Challan for the commercial importers.

The CBR provides that the tax on value addition is the final discharge of the liability of the commercial importer. As such, it is not adjustable as input tax by the commercial importers, unless the imported goods are finally supplied at a value addition in excess of 10 percent and the commercial importer pays his output tax on such higher value addition.

The rule further provides that in case the commercial importer supplies goods as per rules, he is not entitled to claim adjustment of value addition paid at import stage and, therefore, the value of column No. 8A is not to be considered for calculation of carry forward/refund purposes only.

For the purpose of calculation, a detailed working where the commercial importer supplies goods as per rules, is presented here:

========================================== Return Column   Particulars            Tax Amount ========================================== 05       Input Tax CF               Rs 100 06 Unclaimed input tax              Rs 100 08       Tax paid on import          3000 x 15 percent          Rs 450 08A      Tax on value addition 3000x10 percentx15 percent           Rs 45 (It has to as zero for calculation purpose 07       Tax on sales             Rs (150)          1000 x 15 percent Formula (5+6+8)-(7+8A) (100+100+450)-(150-0) (650)-(150) Rs 500== Carry Forward ==========================================

If the value addition of actual supplies is not higher than 10 percent, the value of column 8A is not to be considered for adjustment purposes, being the final discharge of a commercial importer's liability.

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