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

23.5. Invoicing in VAT period for work done in GST period
i. As stated above (23.2) the “time of supply” is the time at which a claim for a
progress payment is made. Thus if a progress payment claim is made during
VAT period in respect of work done in GST period a VAT invoice should be
issued. However if the entire construction was completed before 31.07.2002 and
the claim is made within 14 days as provided in the GST Act a GST invoice
should be issued.
ii. In the case of progress payments where the claim is made in VAT period for the
work done in GST period question will arise if the VAT rate is higher than the
GST rate while the contract agreement is non-reviewable. If the total
consideration (including tax) cannot be changed in terms of the contract
agreement and other laws governing contracts then the amount payable can be
treated as VAT inclusive. VAT component can be computed by applying the tax
fraction.
23.6 Cash Basis
Contractors can obtain approval from the CGIR under Sec. 23 of the VAT Act to declare
“output tax” and “Input tax” in their VAT returns on cash basis. In such cases where GST
charged is received during VAT period and in the first category of cases referred to in
para 23.5(i) where GST charged have to be declared as output tax in VAT returns the
(12.5% GST) tax should be declared in 20% tax cage, i.e Box 1 of the VAT Return. Then
the “value of supply” which should be declared in Box A should be adjusted in such a way
that 20% of the value in Box A = Output tax declared. Thus in such cases the “adjusted
value of supply” that should be declared in Box A is equal to tax multiply by five.
23.7 Tenders
In case of the tenders (both construction contracts and supply contracts) the tenderer
should indicate the VAT due on the contract as a separate item. In evaluating the
contract the VAT component may be ignored but keeping in mind that if the contract is
awarded to a VAT registered person VAT has to be paid in addition to the agreed value.
Even though the contractor may not be a registered person at the time of awarding the
contract, he may subsequently be compelled to obtain registration. Thus all Ministries,
Government Departments, Corporations and statutory bodies, Provincial Councils and
Local Government Institutions, should make a note of the fact that their suppliers should
be considered as registered for VAT if the amount payable under a contract within one
year exceeds Rs.1.8 million or amount payable within 3 months exceeds Rs.500,000/-
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