VAT Guide to Value Added Tax - sri lanka inland revenue ...

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Thus output tax of B on the termination of lease and disposal of bus = 892,500/- @ 10% = 89,250/- (because the VAT rate applicable to this bus is 10%) This transaction being treated as something outside the lease, input tax credit may be allowed for the Bank B on the following basis. Input tax of B (allowable portion) = (Input tax paid) x Unexpired Lease period Total lease Period = 160,000 x 42 72 = 93,333/- Taxable period ending 31.03.2005 C paid Rs.89,250/- as VAT to bank in February on the termination of the lease and purchase of the bus. But Input tax of C on termination of lease 89,250/- is not allowed in the hands of C because he uses the bus in an exempt activity. Input tax on insurance premiums Lessee C who has insured the bus as the exclusive user is not entitled to input credit on insurance premiums because passenger transport services is exempt from VAT. what is stated above. Eg: 2 – If in the above case there was a total loss after the accident and the insurance claim was Rs.1,100,000/- what is the VAT implication ? If it is a total loss the insurance claim can be treated as payment for the disposal of the bus and be taxed at the rate applicable to supply of a bus (i.e 10%) and not at 20%. ∴ Output tax of C = 1,100,000 @ 10% = 110,000/- Input tax of D = 110,000/- But the entire 1,100,000/- will be appropriated by the bank which forwards the insurance claim on be behalf of C leaving only Rs.110,000/- VAT to C because the bus belongs to B. Eg 3 - In the above example, if it was a lorry (lessee is in lorry transport business)then leasing installments are liable to VAT. The rate of VAT is 10% because the lease is under Finance Leasing Act. Sale of Bus by A and purchase by B Output tax of seller A = 1,600,000 @ 20% = 320,000/- Input tax on Bank B = 320,000/- Leasing Advance Output tax of bank B = 300,000 @ 20% = 60,000/- Input tax on lessee C = 60,000/- 110
Leasing Installments Liable to VAT on accrual basis till 5 th installment in arrear is till December 2003. From January 2003 to November 2004 bank can declare output tax on cash basis. Rate is 10% Insurance claim Same as before Termination of lease & disposal * Output tax of bank B = 892,500 @ 20% (Taxable period February 2005) = 178,500/- Input tax on the bank will have to be restricted to 10%. But input tax has already been claimed by the bank @ 20% when the lease was given in October 2002. Amount claimed is 320,000/-. Therefore 160,000/- should be added back in the VAT return of the bank for the month February 2005. Input tax of bank B to be added back = 160,000/- (Taxable Period February 2005) input tax on lessee- Taxable period 31.03.2005 = 178,500/- Input tax on insurance premiums The lessee who insures the vehicle as the exclusive user is entitled to input tax credit on insurance premiums in addition to input tax credit on leasing installments, leasing advances etc. 111
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But for the best to the September 0
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Preface The Value Added Tax Act was
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Chapter - 1 Introduction 1.1 Purpos
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However from the point of view of t
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The following test which has been a
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iv. Import of any fabric, yarn, gre
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Chapter - 3 The definitions of conc
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Eg. 1 : If “A” wants to termina
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c. Time of supply in relation to su
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Thus, any trade, business, etc. are
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a business in Sri Lanka and not to
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When the recipient is not a registe
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• There are two types of registra
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(ii) continued without making an ap
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(d) (e) (f) input credit has been c
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4.13 Activity Code Number “Suppli
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the H.S. classification it may be b
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5.8 Payment of tax on Assessments T
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5.11. Collection of VAT on Imports
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6.3 Approval For Deferment Facility
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iv. If an importer declares only pa
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6.6 Deferment on Local Supplies (Te
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7.4 Tax Invoice Tax invoice should
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7.11 Use of tax fraction to compute
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Lower Rate - 10% Goods and services
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Chapter - 9 Calculation of Tax 9.1
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accounted for in respect of all the
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transferred to a taxable activity a
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Eg. If A is an ice-cream vendor who
Page 60 and 61: (3) In the above case if the regist
Page 62 and 63: • claim (deduct) only the allowab
Page 64 and 65: • “Value of Supply” has to be
Page 66 and 67: VAT chargeable = 900,000 x 20% = 18
Page 68 and 69: • The Director General of Customs
Page 70 and 71: 10.5.6 Milk - item (iv) • Liquid
Page 72 and 73: (i) Insurance - xi(i) • Only the
Page 74 and 75: in Sri Lanka and consumed in Sri La
Page 76 and 77: Chapter - 11 Refunds 11.1 Unlike in
Page 78 and 79: 11.7 Set off of refunds against fut
Page 80 and 81: • To make an additional assessmen
Page 82 and 83: a genuine taxpayer who does not wis
Page 84 and 85: Penalties Tax payers should comply
Page 86 and 87: 15.3 Keeping of records regarding e
Page 88 and 89: 15.8 Example of a VAT Account VAT A
Page 90 and 91: the trading house or the other pers
Page 92 and 93: 16.4 Concessions available to Expor
Page 94 and 95: v. Importation of services are not
Page 96 and 97: Chapter - 17 Hire Purchase Transact
Page 98 and 99: (a) Under the existing provisions V
Page 100 and 101: y the hire-purchase company to the
Page 102 and 103: Chapter - 18 Leasing & VAT 18.1 Lea
Page 104 and 105: installments. Any VAT not recovered
Page 106 and 107: 18.13 Leasing inputs • Leasing in
Page 108 and 109: 18.15 Leasing Advance Sometimes it
Page 112 and 113: Chapter - 19 Mortgages 19.1 Mortgag
Page 114 and 115: • Services provided by internatio
Page 116 and 117: Chapter - 21 Some Obligations Under
Page 118 and 119: However an adjusted figure must be
Page 120 and 121: Chapter 23 Construction Contracts 2
Page 122 and 123: Government agencies mentioned above
Page 124 and 125: Chapter - 24 Rulings 24.1 Following
Page 126 and 127: • None of the companies covered b
Page 128 and 129: which he has supplied to the garage
Page 130 and 131: instructions can be exempted if suc
Page 132 and 133: ii. iii. any other registration tha
Page 134 and 135: i. Membership fees and or subscript
Page 136 and 137: Chapter - 25 Zero Rated Supplies 25
Page 138 and 139: (ii) (iii) (iv) Services directly c
Page 140 and 141: Supply of facilities for crew chang
Page 142 and 143: 4. Yard to Port Transporting contai
Page 144 and 145: Chapter - 26 Travel Trade, Tourism
Page 146 and 147: ii. iii. But “travel insurance“
Page 148 and 149: 26.6 VAT ON MICE Tourism VAT rate a
Page 150 and 151: x. Supply of goods & vehicles free
Page 152 and 153: and for VAT purposes the two compon
Page 154 and 155: (i.e the lottery organizer) on whic
Page 156 and 157: The VAT charged on above should be
Page 158 and 159: 1.2.3 Other imported materials exce
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The sub-contract awarder should pay
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2.3.1 Imported goods (except fabric
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5.2.2 To BOI garment manufacturing
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Annexure - 2 First Schedule to the
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4. Supply of any services to any Di
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Services 1. Electricity more than 3
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Sale before 01.08.2002 - GST Regime
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GST = (CIF + CD + Surcharge + Ex.Sp
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to indicate the date of payment of
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The period within which the Board o
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Mrs. S.N.P. Abrew - Senior Assessor
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VAT Guide to Value Added Tax - sri lanka inland revenue ...

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