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Input Tax Claimable
03-21-2006, 06:13 PM,
#1
Input Tax Claimable
Dear Friends

I want to understand what type of input taxes can be claimed under Section 8 of Sales Tax Act 1990. Do these also include those paid on purchase / import of Fixed Assets used in manufacturing and administration.

Regards.
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03-21-2006, 06:31 PM,
#2
 
<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Ghulam Mustafa</i>
<br />Dear Friends

I want to understand what type of input taxes can be claimed under Section 8 of Sales Tax Act 1990. Do these also include those paid on purchase / import of Fixed Assets used in manufacturing and administration.

Regards.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

Hi

Ya, if the mentioned fixed assets are used for taxable activities then input tax paid on them is adjustable against output tax.

ICAPians, the unparalleled..
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03-21-2006, 08:58 PM,
#3
 

[/quote]

Hi

Ya, if the mentioned fixed assets are used for taxable activities then input tax paid on them is adjustable against otuput tax.

ICAPians, the unparalleled..
[/quote]


i agree

usmani
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03-22-2006, 06:06 AM,
#4
 
i also agree with u Ho Hoooooooo......

iNtElLeGeNt!!!!!!!!!!
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03-23-2006, 12:11 AM,
#5
 
Dear Mustafa,

If purchased or imported fixed asset(s) is directly engaged in the process of making taxable goods (on whose sales output tax is payable) than the claim of input tax is correct.

For example, STax on a generator is claimable if the electric produced from that genset is directly used for the production of taxable goods; but on the other hand, if genset is used to provide electric (in case of load shading) to the office site or the store site will not be allowed.

I hope ur query will be fullfilled.

Thanks
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03-23-2006, 02:23 AM,
#6
 
<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by mashhoodalvi</i>
<br />Dear Mustafa,

If purchased or imported fixed asset(s) is directly engaged in the process of making taxable goods (on whose sales output tax is payable) than the claim of input tax is correct.

For example, STax on a generator is claimable if the electric produced from that genset is directly used for the production of taxable goods; but on the other hand, if genset is used to provide electric (in case of load shading) to the office site or the store site will not be allowed.

I hope ur query will be fullfilled.

Thanks
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

SRO issued pursuant to Finance Act 2005 states that supply of plant and machinery, whether manufactured or not, shall not be deemed to be taxable.
Generators in your example are not taxable. And they can be termed as plant and machinery in a sense that they produce energy. I have its practical example for further clarification.

ICAPians, the unparalleled..
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03-24-2006, 01:50 PM,
#7
 
I agree with Ali
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03-24-2006, 11:02 PM,
#8
 
Ali,

I was also in the same understanding as you are. But last year, I completed an audit from Sales Tax department and the same case was applied there.

Sales Tax Special Procedure (in respect of Electricity); it was clearly mentioned therein that the Sales Tax on Transformers & Generators are not allowed to be claimed [b]but if they will use in direct production of the taxable goods they can be claimed.

On monday, I will give you the section quote for the same.

As far accounting treatment is concerned, the value of assets (whether Plant & Machinery or Equipment) will be recorded as net of General Sales Tax claimed, if any. On the other hand, if the GST was not claimed (due to any other reason) will be recorded on Gross Value (Value + GST)

Regards
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03-25-2006, 03:58 PM,
#9
 
Thanks I am aware of the accounting treatment of it.

But my point is that supply of plant and machinery shall not be deemed to be taxable, claiming its input tax is allowed if you have paid sales tax on it. In simple words I am saying that supply of plant and machinery has been declared as exempt supply.


I will tell you SRO number.

Hope our confusion will be cleared[)]

Thanks for replying.

ICAPians, the unparalleled..
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03-27-2006, 10:54 PM,
#10
 
Section 8 of the sales tax act, 1990 deals with those items or conditions where input tax credit is not allowed.

M.Ar.
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