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

However an adjusted figure must be declared as the “Value of Supply” in
Cage A of the return so that 20% of that value is equal to the output tax
declared. Thus, it is not the “actual” value of supply” but an “adjusted
figure” which is equal to tax multiplied, by 5 has to be declared as ‘value
of supply’ in cage A.
Eg: GST invoice issued on 12.08.2002 in respect of security services
provided in July 2002 is as follows.
Rs.
Value of supply 20,000
GST @ 12.5% 2,500
Supply + GST 22,500
NSL @ 6.5% 1,462
Total consideration 13,962
This Rs.2500/- must be declared as output tax in cage 1 of the VAT
return for the relevant taxable period depending on the accounting basis
of the supplier. However the value of supply should be declared as
2500x 5 = 12,5000/- and not as 20,000/- because 20% of 12,500 =
2,500/-.
N.B. In respect of taxable periods on or after 01.08.2002 the VAT will be
at 20% but there will be no NSL.
22.2. Bad debts
If a bad debt written off during GST period is received during VAT period it will be taxed
at the GST rate at which it was written off. That means 1/9 of the amount recovered
should be declared in Cage 1 of the VAT return as output tax and 5/9 should be declared
in Cage A as the value of supply.
Ex. A registered person supplied services to a non-registered person (say construct a
house) for 100,000/- in 1999. Following invoice was issued.
Value of supply - 100,000
GST @ 12.5% - 12,500
Total consideration 112,500
This 125,000/- was written off as a bad debt in April 2002. But 90,000/- was recovered
on 30.09.2002.
• Amount recovered Rs.90,000/- is treated as a part payment inclusive of VAT.
The tax content (fraction) in the total consideration = 12,500
112,500
= 1/9
∴ The tax (GST) content in the (part payment )
of 90,000/- = 1/9 x 90,000
= 10,000/-
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