vat lahore

7/29/2019 VAT Lahore

1/76

MYTHMYTH

OROR

Presented By:

Abdul Razzaq FCMA


2/76

(BenjaminFranklin)

n

swor

no ng

can

e

sa o ecer a n,excep

ea an axes.


3/76

History

VATVSGST

Effectsof

VAT


4/76

DirectTaxvs.IndirectTax

Advalorem,

Value

added

and

Specific

Tax

nput axvs. utput ax

Fake,Flying

and

VAT

Invoice

Exempt,ZeroRatedandTaxable

Goods/Services


5/76

taxpayerto

someone

else.(income

tax)

thebuyerandhencethebuyer

ultimatel

a sthe

tax.

VAT

CollectionoftaxinPakistan33%:77%


6/76

Valueadded:ataxwithrespecttovalue.

Specific:

A

tax

with

respect

to

quantity.(

.


7/76

purchases.

received/receivablewithsales.


8/76

invoice.

goods/services.

:

GSTnumbersofboththesupplierandthe


9/76

Exempt,ZeroRatedandTaxableGoods/

Serv ces

Exem t:Whereinanin uttaxisa artofcost

Zerorated:

Wherein

an

output

tax

is

being

chargedattherateofZeropercentand

taxpayerisentitledtoclaimrefundofinputtax

Taxable:Wherein

an

output

tax

is

being

chargedattheprescribedrate(say15%)and

taxpayerisentitledtoadjustinputtaxagainst

out uttax


10/76

Exempt,ZeroRatedandTaxableGoods/

erv ces

ZeroRated: Inputisrefundable

Taxable: Inputispayable/adjustable


11/76

Accountin

entriesin

case

exem t

and

taxable

oods

PaymentofElectricityBillincaseofexemptgoods

ElectricityExpense 115,000

Taxdeductionatsource 10,000

Bank 125,000

Payment

of

Electricity

Bill

in

case

of

taxable

goods

ElectricityExpense 100,000

InputTax 15,000

Taxdeduction

at

source 10,000

Bank 125,000


12/76

GDP

world

increased350%duringthisperiod

2%richowns80%ofcountryswealth

corrupt ono on upees nnum s

onlyin

FBR

(Shoukat

Tareen)


13/76

Export

Oil,Gas,Communication

1600Companiesarepaying85%ofTotalTax.


14/76

Property,Stocks,

services

etc.

Corruption/Tax

evasion

Energycrises

Lossin overnmentownedentities

AfghanTransit


15/76

Earned rofitfrom200001to200708.

Grossloss

Rs.

19.5

billion

during

2008

09.

200809comparetopreviousyear.

. comparetoaprofitof3.6billioninprevious

year.

Abail

out

package

of

Rs.

10

billion

was

given

to

PSM.

SamesituationisinPIA,WAPDA,Railwayetc.


16/76

Example: Rs.

InvoicePrice 25

ssesse a ue

CustomsDuty(10%) 5

a es ax

IncomeTax(4%) 2

urt er

ax

(Govt.

Revenue)

TotalCost 116

A g anio ert esamepro uctat 110


17/76

VATissimilartoaSalesTax.Itisataxonthe

market

value

added

to

a

product

or

material

at

eachstageofitsmanufactureordistribution,

.

Laure)


18/76

ValueAddedTax(VAT)isaconsumptiontaxofupto25%thatisleviedonbothgoodsandservices inmostcountriesaroun t ewor .T ssystem spresent nEurope,Japan,

andAustralia

and

anumber

of

others

countries.

They

also

allowarefundofVATtononresidentandResident.

VAThasitsorigininEuropeanCountries(EC).Itwas

pioneeredin

France,

which

introduced

avalue

added

type

o consump on axongoo s n a was ev e a eproductionstage.

Intheworld,morethan160countrieshavesuccessfull

implementedVAT

system

of

taxation.

Out

of

31

member

countriesofOrganizationforEconomicCooperationandDevelopment(OECD),Mostofthe countrieshaveaccepted

as e rma nconsump on ax.


19/76

enmar n an ermany

France 19.60% Ireland 21% Italy 20%

Netherlands 19% Portugal 20% Spain 16%

Sweden 25% UnitedKingdom 17.50% Poland 22%

Argentina 21% Canada 5% Croatia 22%

Iceland 24.50% India 12.50% Mexico 15%

Russia 18% China 17% Uruguay 22%

w zer an . orway ou r ca

Indonesia 10% Kenya 18% Korea 10%

Nigeria 5% Nepal 10% SriLanka 12.50%

Bangladesh 15% Egypt 15% Source:EconomyWatch


20/76

Similarities:

Bothare

indirect

taxes.

.

Differences (incaseofPakistan)

Services

Zerorating

ExemptList

DiscretionaryPowers


21/76

46(5)TheBoardmay,bynotice,canceltheregistrationofapersoniftheBoardissatisfiedthat

(a)thepersondoesnothaveafixedplaceatwhich

thepersonseconomicactivityiscarriedon;

(b)the

person

has

not

kept

proper

records of

its

business;

(c)thepersonhasnotfiledregularandreliable

returns or

(d)thepersonhasnotcompliedwithitsobligationsunderothertaxation

laws,includingthecustomslaws,andtherearereasonablegroundsto

e eve

t at

t e

person

w

not eep

proper

recor s

or

e

regu ar

an

reliablereturns.


22/76

DifferencebetweenVAT&GST

ncase

o

Pa stan

betweennewly

introduced

VAT

and

existingGST,incaseofPakistan:


23/76

GST:Multiple

tax

rate

such

as

16%,

18%,


24/76

VAT:In14entries Exem t oodsareclearl

defined.

(

first

Schedule) GST:82(71+11)goodsambiguouslydefinedas

per TableI&IIofsixthscheduleofSalesTax

Act1990andwithalmost30SROs.

Fooditems,medical,educationalservices&materialis

exemptinEUcountries.InUKandAustralia,theseare

zerorated.

Indianexemption

list

is

very

comprehensive

even

coveringtextileandelectricity.


25/76

D m tic Z r Ratin 23 and 2nd

Schedule

VAT:Exportandonlyfewothersuchas

Warranty

claims,

maintenance,

sale

of

economic

activity,

Basic

medicineetc.

: num ero sec orsarezerora e suc as:

Textile SewingMachines

Leather Surgicalgoods

Cookedandun DairyIndustry

cookedmeat

based

products

Carpet StationeryIndustry

SportsItems Bicycles


26/76

books,newspapers

and

magazines

youngchildren'sclothingandfootwear

specialexempt

items

for

example

equipmentfordisabledpeople


27/76

Driedbeans. Milk

powder.

Dairypowderblend. Rice.

Vegetables. Fruit.

Vegetableoil. Milk.

u ure

m . rown

w ea en

mea .Eggs.


28/76

Medicaland

Assistive

Devices

BasicGroceries

Agricultureand

Fishing


29/76

VAT:Noconce t

GST:Manufacturer

will

pay

tax

according

toretailpriceon17items.


30/76


31/76

VAT:Noexem tionorzeroratin canbemade

byanygovernmentdepartmentorauthority ,

exceptasexpresslyprovidedinthisAct.

GST:BoardhaspowertoissueSROunder

numberofsectionsevenregardingzerorating,

.


32/76

VAT:Zerorated

GST:No

concept


33/76

InVAT:

Latefiling

with

the

approval

of

the

board.

approvalofBoard.

Noapprovalfromcommissionerincaseoflate

fillin

Within120daysincaseofrevisionandafter

theapprovalofCommissioner


34/76

Inputtaxadjustmentincaseof

manufacturer

VAT:100%

GST:90%

of

output

tax


35/76

VAT:SHGaresub ecttotax In uttax

adjustmentisallowedbytaxfraction

GST:Notaxonsaleandpurchaseofsecond

handgoods


36/76

PurchasefromunregisteredpersonofRs.100.

Tax

fraction

=

VAT

Rate/100+VAT

Rate

(15/115)= * = .

SaletoregisteredpersonRs.115.(ValueEx.

.

.

.

VATPayable=OutputTax Inputtax

=15

13.04

=1.96


37/76

InputTaxadjustmentincaseofpurchaseof

xe

sset

GST:Equal

proportion

in

twelve

months


38/76

paidwhich

relate

to

bad

debts

in

the

periodinwhichhe/sheactuallywriteoff

thesebaddebts.


39/76

and

payments

shallbetreatedaseparatesupply.


40/76

Mistake

1%/M

rau

InGST

Mistake KIBOR+3%

Fraud 2%/M


41/76

AllGoodsareTaxable exce tfollowin :

Wheat Wheatflour

Unprocessed

peas

Waterwithoutbrandname

Saltwithoutbrandname

Books,Newspaper,

Periodicals

body

Contraceptives Preciousmetal

otherthanafirst

supply


42/76

categories

ProvincialServices


43/76

railway,

sea,

or

air


44/76

Allservicesaresub ectto rovincialSalesTax

exceptthefollowing

Funeral,burialorsimilarservices

Servicesbyreligiousinstitutions

organization

CertainFinancialservices.

CertaineducationservicesprovidedbyaninstitutiondulyregisteredbytheMinisterof

education

Certainsupplies

of

immoveable

property.


45/76

subject

to

tax. , , ,

Caterers

2.Advertisement

on

TV

and

Radio

3.CustomsAgents,ShipChandlersand

Stevedores

4.Courier


46/76

from

manufacturer

or

importer

to

retailer.

:

importer


47/76

Taxinvoices

Salesreceipts

Periodofretentionforrecord.

1.Sixyearsfromtheendofthetaxperiod.

2.Untilthefinaldecisionismadeincaseofany

au t,recovery,prosecut onan procee ng.


48/76

Taxinvoicewillincludethefollowings:

SerialNo.

Name,AddressandNTNofSupplier.

Nameaddress,NTNorCNICofBuyer.

DescriptionandQuantity.

ValueEx.

Tax,

Tax

Rate,

Tax

and

Value

Inc. Tax.


49/76

Ifsalesareu to25 000andthebu eris

unregisteredpersonthensupplierwillissue

Salesreceipt

which

will

include

the

followings:

Date

Name

and

Registration

numbers

of

Supplier Descriptionofgoodsorservices

Totalamount

Anindicationthattaxisincludedinamount


50/76

Salesrecei tcanbeissuedtothatunre istered

personwhichisnotrequiredtoberegistered.(

ashift

of

responsibility)

Serialnumberismissing

Name

and

address

of

buyer

is

missing Quantityismissing

ManufacturercanalsoissueSalesRecei t.

Noperdaysalesreceiptslimitforsamebuyer.


51/76

TurnoverforRegistration:

VAT: 7.5Million/Annum

Decisionregardingregistrationorrefusalwillbeissuedw n aysan anappea can ema eaga nsdecision(41)

Section

79,

dealing

with

appeals

does

not

provide

the

r g to appea .

GST:ForManufacturernotbeingacottageindustryandretailerwhoseturnoverexceeds5Million/Annum

ALLwholesaler,

trader,

distributor

,importer and

dealerwithoutanylimitationofturnover

4.Requirementofregistration.Thefollowingpersonsengagedinmakingoftaxable

supplies in Pakistan (including zerorated supplies) in the course or furtherance of any


52/76

suppliesinPakistan(includingzero ratedsupplies)inthecourseorfurtheranceofany

taxableactivitycarriedonbythem,ifnotalreadyregistered,arerequiredtobe

,

y:

(a)amanufacturernotbeingacottageindustry

(b)aretailerwhosevalueofsupplies,inanyperiodduring

thelast

twelve

months

exceeds

five

million

rupees;

c an mpor er;

(d)awholesaler(includingdealer)anddistributor;

(e)apersonrequired,underanyotherFederallawor

Provinciallaw,toberegisteredforthepurposeofanydutyor

collectedunder

the

Act;

20[and]

(f)acommercialexporter,whointendstoobtainsalestaxrefundagainst his

zeroratedsupplies.


53/76

VAT Pa a l 21

= +

adjustments)

(Input

Tax

+

Decreasing

adjustments)


54/76

Carr F rwar an R f n 7

= +

Decreasing

adjustments)

are

greater

than(OutputTax+Increasing

adjustments)

Carr

forwardcan

be

made

u

to

six

month

month,it

will

be

claimed

refund.


55/76

(i)

50%or

more

persons

turnover

is

or

will

(ii)50%ormoreinputrelatetozerorated

.

theninputtaxwillberefunded.(38)


56/76

RefundincaseofAdv.TaxorWithholdin Tax 24

+

others

(Government

department

or

LTU)

isgreaterthanoutputtax+increasing

adjustments thentheamountshallbe

refundedwithoutcarryforward.


57/76

Incase

of

delay

additional

refund

@

WhereanofficerofIRSsuspectsor

genuine,trueorcorrect,hemayreject


58/76

Postsu l ad ustment 29

Baddebts

adjustment (30)

Cancellationofregistration(32)

Changeinrate(34)

Withholdingtax(36)

Defaultsurcharge,

fine,

penalty,

fee

etc.


59/76

Withholdingtax

(36)

Postsupplyadjustment(29)

Bad

debts

adjustment(30) Registration(33)

arry orwar


60/76

GST:2%

VAT(15%) GST(16%)


61/76

u

=

Inputtax = 15 16

Add.Tax = 3.75 2

TotalInput =18.75 18

.

OutputTax = 18.75 18

Ifthesalepriceislowerthan125,theimporterwillclaimrefund.


62/76

GST:3.2%

VAT


63/76

PurchasePrice =

100

In uttax = 15

a epr ce = .

Outputtax = 20

Withholdingtax = 5

IfPriceislowerthan133.33,thesupplierwillclaimrefund.


64/76

exceedsfiftythousandrupeesthe

paymentshallbemadebyverifiable

bankinginstrumentfromthebank

accountofthebuyertothebank

accoun

o

ese er.

Ifthebuyerdonotmakepaymentwithin

six

month,

the

buyer

will

make

an

increasingadjustment.


65/76

importsarepartlyforcreditablepurpose.

partlyapplies.

.


66/76

VATpaid

on

purchase

of

goods

VATpaidonimportofgoods

VAT

paid

on

purchase

of

services VATpaidonimportofservices


67/76

VATreceived

on

sales

of

goods

VATreceivedonsalesofservices

VAT

paid

on

purchases

of

services


68/76

inputtax,supplierwillconsideritout

puttax.

Sixsucceedingtaxperiodsafter

considerin

itout ut

tax

b

the

su lier.


69/76

ForensicAudit

would

give

unlimited

togotoanyextentforcarryingout

investi ationa ainst

are istered

unit.

beyondtax

record

required

to

be

maintained.


70/76

increase

Domesticzerorated oodsinGST

GoodsandserviceswhichwillbesubjecttotaxinVAT

Value

addition

in

supply

chain

Thepricesofthefollowinggoodswill

decrease

Goodsand

services

which

are

subject

to

tax

@

16%,

18%,

21%,

25%inGST


71/76

Increasein

Undocumented


72/76

Increasein

Govt.

revenue

Broadbase


73/76

Noone

knows

the

pros

and

cons

Lakeofsupportoftrade

associations/chambers


74/76

StandByArrangements(SBA)of$7.6billiontobepaidin23months

Enhancementin

July

2009

to

$11.3

billion

Conditions:

1. VATfromJuly2010

2. MonitoringofrevenuecollectionbyIMF

MonitoringTeamconsistof :

1. 6DirectorsofIMF

2. 2DirectorsofWB

(JewishProverb)


75/76

axes

grow

w t out

rain.


76/76

Thank

You

vat lahore

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