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

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VAT chargeable = 900,000 x 20% = 180,000/- • B should also charge VAT on transport charges = 500,000 X 20% = 100,000/- • B should declare these amounts as his output tax in his VAT return for the taxable period ended 30.09.2002. • B’s VAT return, value of supply = 1,400,000 Output tax (VAT) 180,000 + 100,000 = 280,000 • Insurance company should pay 180,000/- in addition to 900,000/- to B and claim that amount as input tax in its VAT return for the same taxable period. Persons who hired his van should pay Rs. 100,000/- as VAT in addition to transport charges of 500,000 • Input tax on purchase Input tax paid on the purchase of van = 120,000/- Amount attributable to business(transport)use = 120,000 @ 70% ∴ Input tax allowable = 84,000/- • Input tax on expenses Total VAT paid on running expenses = 5,600/- Amount attributable to business use = 5,600 x 70 100 = 3,920/- Total input tax that can be claimed by B for = 84,000 + 3,920 the taxable period ended on30.09.2002 ∴ Input tax allowable = 87,920/- * If there are no other transactions the amount payable to government. = Output tax-Input tax = 280,000 – 87,920 = 192,080/- N.B If the vehicle was used only for insurance business then it becomes a travelling vehicle and no input tax is due. 66
10.1 Exemption from payment of VAT Chapter – 10 Exemptions • Section 8 of the Act exempts certain “supplies” of goods and services (including certain imports) from VAT. The exempt “supplies” are enumerated in the First Schedule to the Act. • What is exempted is the “supply” (including imports) and not the persons (ie. individuals and organizations) Thus irrespective of the person importing goods or the person receiving the “supply”, if the “supply” is exempted then the “receiver” of the supply, (or the importer) is not required to pay VAT on such supply/import. The only instance where individuals and organizations are exempted from VAT is the exemption of Diplomatic Missions and privileged individuals and organizations qualified under the Diplomatic Privillages Act NO. 9 of 1996. There too the exemption is limited to certain supplies and certain imports as identified by the C.G.I.R (vide Chapter 20). • Thus all individuals and organizations whether they are Ministries, Departments Non profit making organizations, Religious Institution etc., other than those privileged individuals and organizations, are required to pay VAT when they import goods and when they receive “supplies” of goods and services from Registered Persons, if the “import” or the “supply” is not exempted. 10.2 Exemption from charging VAT The Act does not provide any exemption in this regard. If the value of the taxable supplies made by any person exceeds the registrable threshold then such person (whether an individual or an organization) should register for VAT and charge VAT on the taxable supplies made by such person. The status of the individual or the nature of the organization is irrelevant. 10.3 Imports (Exemption) • Out of the goods enumerated in the H.S. Code classification the Customs has identified the VAT exempt goods in consultation with Inland Revenue. They are clearly indicated in that VAT Guide & PRO – 03/2002 dated 01.08.2002. 67
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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
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 56 and 57: transferred to a taxable activity a
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 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
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
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Chapter - 21 Some Obligations Under
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However an adjusted figure must be
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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
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5.2.2 To BOI garment manufacturing
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Annexure - 2 First Schedule to the
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4. Supply of any services to any Di
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Services 1. Electricity more than 3
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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
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VAT Guide to Value Added Tax - sri lanka inland revenue ...

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