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

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transferred to a taxable activity and exempt activity becoming liable after sometime. Eg 1. Change in status of the activity - Machine was purchased on 01.08.2002 during VAT period for Rs.312,500/- and used in an exempt activity. With an amendment of VAT the status of the activity changed . Activity became a liable (taxable) activity w.e. from 01.08.2004. If the life time of the machine is 5 years. VAT paid when purchased = 312,500 @ 20% = 62,500/- Input credit entitlement for VAT is calculated as follows. = Total input tax paid x period of taxable use Life time of asset = 62,500 x 3 5 = 37,500/= vii. viii. Eg.2 Change in use - This happens when an asset is used in an exempt activity and the asset is transferred to taxable activity later. Calculation is the same as above. Input tax adjustment is due in respect of bad debts written off. Input tax incurred in providing re-imbursement of personal expenses of an employee is not allowable since it is not connected to the taxable supplies made by the employer. 9.4.3 Record keeping for input tax A separate record should be maintained in respect of input tax claimed in relation to GST invoices in VAT returns. 9.4.4 Special Input tax (i.e NSL in stocks) * NSL embedded in the unsold stocks as at 31.07.2002 can be claimed as input tax by importers who are engaged in importing and selling of goods imported by them if the goods are not subject to any processing before sale. IF * the goods were liable to GST if sold prior to 01.08.2002. * goods imported will be available for sale by the same importer * no deduction has been claimed under any other provision * the details of the stocks and NSL paid on those goods are submitted to the C.G.I.R. before 31.12.2002 on from VAT 24 after a physical stock - taking or from computerized records of stocks The claim can be made only when the CGIR approves the claim. Any excess input tax is not refunded but can be carried forward indefinitely to be • It is clear from above that any NSL embedded in stocks which were exempt from set off against future VAT. GST but liable to VAT will not be considered. 56
9.4.5 Transitional Provision – Sec. 76 - Where the C.G.I.R is satisfied that; * a registered person or other person * has paid VAT on goods acquired on or after, 01.08.2002 for the purpose of making an exempt supply and * such supply has subsequently become a taxable supply and * such goods are being used in making such taxable supply. Then * VAT paid on the acquisition of such goods shall be deemed to be input tax. - IF The goods are being used only partly for a taxable supply then C.G.I.R shall determine the allowable portion of such input tax. 9.4.6 Input tax on GST invoices – Sec. 22(2) Input tax not claimed on invoices issued prior to 01.08.2002 and on any valid GST invoices issued after 01.08.2002 may be claimed under VAT. (Vide para 7.8). In respect of invoices issued prior to 01.08.2002 the six months rule in para 9.4.2(iv) is applicable with effect from 01.08.2002 irrespective of whether the registered person is on cash basis but cash not paid by that time. 9.4.7 Input tax on Sri Lanka Telecom – Master Invoices Sri Lanka Telecom issues master invoices to subscribers who have several telephone connections. If such a subscriber is a registered person and claims input tax on telephone bills an adjustment should be made in respect of telephones which were not used for the taxable activity. The disallowable VAT may be computed by multiplying the VAT on the master bill by the fraction VAT on Disallowable Bill/VAT on Gross Bill 9.5 Burden of VAT From the above mentioned method of calculation of VAT (paras 9.1 and 9.2) it can be seen that the burden of VAT falls on the “final consumer” only. Final consumer means the last person in the chain of production and distribution who receives (buys) the goods or service but does not use it in any taxable activity. He pays the VAT to his supplier and not directly to the government but the amount paid by him is received by the government through various stages of production and distribution of that goods or service. This can be illustrated by a trivial example. 57
Page 1 and 2:
But for the best to the September 0
Page 3:
Preface The Value Added Tax Act was
Page 6 and 7: Chapter - 1 Introduction 1.1 Purpos
Page 8 and 9: However from the point of view of t
Page 10 and 11: The following test which has been a
Page 12 and 13: iv. Import of any fabric, yarn, gre
Page 14 and 15: Chapter - 3 The definitions of conc
Page 16 and 17: Eg. 1 : If “A” wants to termina
Page 18 and 19: c. Time of supply in relation to su
Page 20 and 21: Thus, any trade, business, etc. are
Page 22 and 23: a business in Sri Lanka and not to
Page 24 and 25: When the recipient is not a registe
Page 26 and 27: • There are two types of registra
Page 28 and 29: (ii) continued without making an ap
Page 30 and 31: (d) (e) (f) input credit has been c
Page 32 and 33: 4.13 Activity Code Number “Suppli
Page 34 and 35: the H.S. classification it may be b
Page 36 and 37: 5.8 Payment of tax on Assessments T
Page 38 and 39: 5.11. Collection of VAT on Imports
Page 40 and 41: 6.3 Approval For Deferment Facility
Page 42 and 43: iv. If an importer declares only pa
Page 44 and 45: 6.6 Deferment on Local Supplies (Te
Page 46 and 47: 7.4 Tax Invoice Tax invoice should
Page 48 and 49: 7.11 Use of tax fraction to compute
Page 50 and 51: Lower Rate - 10% Goods and services
Page 52 and 53: Chapter - 9 Calculation of Tax 9.1
Page 54 and 55: accounted for in respect of all the
Page 58 and 59: 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
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Thus output tax of B on the termina
Page 112 and 113:
Chapter - 19 Mortgages 19.1 Mortgag
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• Services provided by internatio
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Chapter - 21 Some Obligations Under
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However an adjusted figure must be
Page 120 and 121:
Chapter 23 Construction Contracts 2
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Government agencies mentioned above
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Chapter - 24 Rulings 24.1 Following
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• None of the companies covered b
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which he has supplied to the garage
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instructions can be exempted if suc
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ii. iii. any other registration tha
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i. Membership fees and or subscript
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Chapter - 25 Zero Rated Supplies 25
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(ii) (iii) (iv) Services directly c
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Supply of facilities for crew chang
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4. Yard to Port Transporting contai
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Chapter - 26 Travel Trade, Tourism
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ii. iii. But “travel insurance“
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26.6 VAT ON MICE Tourism VAT rate a
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x. Supply of goods & vehicles free
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and for VAT purposes the two compon
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(i.e the lottery organizer) on whic
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The VAT charged on above should be
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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
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
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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
Page 182:
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