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

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.
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