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

life time is six years and the private use was commenced two years after the date
of purchase the amount disallowable (i.e to be added back) in the 3 rd year will be
120,000 x 4 x 30 = 56,000/-)
6 100
(10) In the above example the situation will be different if the asset is used 70% in a
taxable activity and 30% in an exempt activity carried on by the same registered
person and the van is transferred completely to the exempt activity, the output
tax adjustment will be as follows.
(i) Adjustment on input tax relating to purchase = same
(ii) Adjustment on input tax relating to usage = same
(iii) Adjustment on output tax relating to disposal :- as follows.
• If the van is transferred totally for the exempt supply (market value = 300,000/-)
The value of supply of asset from
taxable activity to exempt activity = 300,000 x 70
100
= 210,000/-
Output tax payable = 210,000 x 20
100
= 42,000/-
(11) A Company (registered person) provides fringe benefits to an executive officer
during tax period ended on 30.09.2002 as follows:
Overseas travel - 75,000
Medical benefits - 5,000
Free transport - 6,000
Other benefits - 4,000
90,000
What is the output tax payable by the company?
A. Overseas travel is a zero-rated supply (Vide Chapter 25) . Medical benefits and
official transport are exempt supplies (Vide Chapter 10). Therefore only the
other supplies amounting to Rs.4,000/- is liable at 20%. The company should
pay 800/- as output tax. The company is also not entitled any input credit that
can be attributed to exempt supplies (Medical & transport)
(12) A Registered person has a jackpot machine at his hotel. He cleared the
machine on 30.09.2002 and he banked and the money on 01.10.2002. Amount
in the machine was Rs.16,800/- What is the VAT implication?
• This is a taxable supply. Time of supply is 30.09.2002. Therefore VAT should
be paid for the taxable period ended 30.09.2002.
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