Raw Materials used in making a taxable supply

[imrank]

Hi,

Is it right to assume that there will be NO sales tax charged on raw materials that are sold to manufacturers who will use that raw material to make a taxable supply and charge sales tax e.g. Zips, buttons, thread, etc will not attract sales tax on the sale? Can someone please guide me where in the Act I can find this?

Thanks as always,

Imran

[awaisaftab]

No dear
Sales tax is charged on the raw material also but you can adjust the amount of tax that you paid on the supplies agaist the sales tax collected on sales. Plesase read section 2 & 3 of sales tax act,1992


Regards

Awais Aftab

[imrank]

Hi,


One of my friends is registered for Sales Tax and has a Zips Manufascturing business. He imports zips, dyes/colours and then sells on to manufacturers who use these zips to manufacture jeans. He advises me that he doesn't charge any GST on the Zips as the zips are exempted from sales tax charge. If we also go to the schedule of "exempted" items under the Sales Tax Law, I do remember reading that any raw material sold to a manufacturer who will use the raw material to manufacture and charge sales tax will be exempt from sales tax (Zips and Jeans in our example).

Please share your thoughts.


Thanks,

Imran

[ahsan_aziz_12333]

dear , such raw material is exempt . but is the supply is exempt, such raw material shall b taxable.