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

• “Value of Supply” has to be ascertained by using the tax fraction because the
gross collection is treated as including VAT.
Thus VAT inclusive consideration = 16,800
VAT = 1/6 x 16,800
= 2,800
∴ Value of supply = 14,000
• The registered person should declare this amount as output tax in his VAT return
for the taxable period ended 30.09.2002.
• The same treatment is applicable to other coin operated machines.
(13) A sports club which is a registered person runs a raffle. The tickets were sold
during GST period. The raffle was drawn on 30.09.2002. The results were
published on 07.10.2002. The total collection amounted to Rs.750,000/- and the
cost of the prizes amounted to Rs.350,000/- What is the VAT implication?
• This is a taxable supply. Time of supply is 30.09.2002. Therefore VAT should
be paid for the period ended 30.09.2002.
• Value of supply = 750,000 – 350,000 = 300,000/-
• VAT payable = 1/6 x 300,000 = 50,000/-
• The reason for using the tax fraction is that the collections are treated as VAT
inclusive.
(14) A registered person dealing in computers and accessories offered a part
exchange ( a trade off) of a computer to a customer. Value of the new computer
is Rs.125,000/- excluding VAT. The market value of the old Computer (excluding
VAT) is Rs.30,000/- Customer pays the balance 95,000/- to the dealer
(Computers are liable to VAT at 10%.)
* Value of supply by the dealer = 125,000
VAT at 10% = 12,500/-
Customer should pay 12,500/- as VAT to the dealer in addition to 95,000/-
• Dealer should declare this 12,500/- as output tax.
• In this case if the Customer is also a registered person then he should charge
30,000/- @ 10% = 3,000/- as VAT to the dealer. Customer should declare this
amount as his output tax and 12,500/- will be his input tax. Rs.3,000/- will be the
input tax in the hands of the dealer.
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