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

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(i.e the lottery organizer) on which turnover tax was charged prior to the introduction of GST, but no turnover tax is payable on the sale value of the sweep ticket because there is neither a retail or wholesale business nor a sale of goods or commodities which are pre-requisites for charging turnover tax on the total sale proceeds. Even when Department was implementing the turnover tax on retail and wholesale sales prior to 1991 the sale of sweep tickets was not treated as a sale liable to turnover tax but only the commission or discount was treated as liable. As stated earlier the legal provisions leading to the tax treatment applicable to the facts of this case did not change although the taxing authority has changed. Therefore the question of Provincial turnover tax does not arise and the agent should register for VAT if the total commission or the margin exceeds the taxable threshold. The agent should issue a tax invoice to the lottery organizer and charge VAT which he should declare as output tax. Otherwise 1/6 of the commission/margin is treated as output tax. Xvi Layby Sales - In the case of layby sales the customer deposits some money (sometimes the deposits may be made from time to time) with a view to purchase some goods but no transaction occurs until the customer finally purchase the goods and takes possession of the goods. This is different from an advance because an advance is paid when a transaction is concluded. Layby deposits are refundable and the transaction is not concluded at the time of the deposit. The time of supply of goods is the time at which the transaction is concluded usually by taking possession of the goods. The layby deposit is not treated as a consideration for any supply. But if the customer changes his mind and request for a refund of the deposit the layby seller may sometimes forfeits a part of the deposit. If he forfeits part of the deposit that part is treated as a consideration for supply of a service. 3. Local Government authorities Local government authorities and provincial councils are frequently engaged in taxable activities and are liable to be registered and required to charge and collect VAT on the (taxable) supplies made by them. i. Exemptions The following supplies made by them are exempt from VAT and they are not required to charge and collect VAT on such levies. 154
1. Assessment rates 2. Taxes on vehicles and animals 3. Sales taxes on businesses and professions 4. Entertainment tax on cinemas 5. Tax on sale of lands and tax on undeveloped lands 6. All kinds of penalties (Eg. Penalty for unauthorized constructions) 7. Rents on residential dwellings 8. Charges for public library services 9. Charges for health cares services (The health care centres of local authorities are treated as medical institutions) 10. Charges for educational services if they are normal educational services as provided in government schools (Eg. Special computer training classes are not exempt. But any pre-school nurseries conducted by local authorities can be exempted.) 11. Crematoria and burial charges 12. Interest on loans given to employees Therefore any input tax paid on goods and services obtained for the purpose of supplying the above services will not be eligible for deduction. They are also not required to pay VAT on the following. 13. L.L.D.F. loans received by local authorities 14. Court fines received by local authorities 15. Stamp duties received by local authorities 16. Interest on Fixed deposits 17. All grants allocated to the council/Sabha if not related to a supply 18. All sums appropriated by the parliament if not related to a supply and input is not claimed on spending of such grants. ii. Goods and Services liable at 10% Local authorities (and provincial councils) are required to charge & collect VAT at 10% on the following services provided by them – 1. Water supply charges 2. Electricity supply charges in excess of 30 kwh per month. 3. Charges made by restaurants and guest houses carried on by them. 4. Sale of any goods enumerated in the Second Schedule to the Act 155
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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
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(3) In the above case if the regist
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• claim (deduct) only the allowab
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• “Value of Supply” has to be
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VAT chargeable = 900,000 x 20% = 18
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• The Director General of Customs
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10.5.6 Milk - item (iv) • Liquid
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(i) Insurance - xi(i) • Only the
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in Sri Lanka and consumed in Sri La
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Chapter - 11 Refunds 11.1 Unlike in
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11.7 Set off of refunds against fut
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• To make an additional assessmen
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a genuine taxpayer who does not wis
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Penalties Tax payers should comply
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15.3 Keeping of records regarding e
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15.8 Example of a VAT Account VAT A
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the trading house or the other pers
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16.4 Concessions available to Expor
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v. Importation of services are not
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Chapter - 17 Hire Purchase Transact
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(a) Under the existing provisions V
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y the hire-purchase company to the
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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 110 and 111: Thus output tax of B on the termina
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 156 and 157: The VAT charged on above should be
Page 158 and 159: 1.2.3 Other imported materials exce
Page 160 and 161: The sub-contract awarder should pay
Page 162 and 163: 2.3.1 Imported goods (except fabric
Page 164 and 165: 5.2.2 To BOI garment manufacturing
Page 166 and 167: Annexure - 2 First Schedule to the
Page 168 and 169: 4. Supply of any services to any Di
Page 170 and 171: Services 1. Electricity more than 3
Page 172 and 173: Sale before 01.08.2002 - GST Regime
Page 174 and 175: GST = (CIF + CD + Surcharge + Ex.Sp
Page 176 and 177: to indicate the date of payment of
Page 178 and 179: The period within which the Board o
Page 180 and 181: Mrs. S.N.P. Abrew - Senior Assessor
Page 182: 182
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VAT Guide to Value Added Tax - sri lanka inland revenue ...

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