Sales Tax Instructions

Sales Tax Instructions, 2009
Input tax credit
on taxable supplies = Value of taxable supplies__________ x Input tax
Value of taxable plus exempt supplies
8. By using the value of one maund of cottonseed and the values of items
produced there from (i.e. 36 seers of oil cakes, 4 seers of oil and 0.6 seer of sludge), the
following position would emerge for determining the input credit admissible on taxable
supplies:-
Input tax (on cottonseed) = Rs.36 @ Rs.
Value of taxable supplies i.e.
cake plus sludge = Rs.136 + 2.40 = Rs.138.40
Value of exempt supplies (oil) =
Rs.116 @ Rs.
Value of taxable plus exempt
supplies = Rs.138.40+Rs.116= Rs.254.40
Tax credit or input tax
adjustment = 138.40 36 = Rs.19.38
254.40 1
Tax payable on oil cake &
sludge = Rs.24.48 + Rs.0.43 = Rs.24.91
Tax credit = Rs.19.58(-)
Net output tax payable on taxable Rs.5.33
supplies (beyond the amount of
Rs.36 already paid on cottonseed).
9. Another question arises as to what is the method and time of payment of
tax by ginner-cum-expeller units. As in-house crushing/use of cottonseed is a taxable
supply, such units will compute the date of crushing as the date of supply and thus all
crushing done in a tax period will be considered as taxable supplies made which should
be accounted for and tax paid by the 20 th day of the month following the tax period, in
accordance with the normal procedure. Net output tax payable on cake & oil sludge
according to the apportionment formula will be paid in the normal was after taxable
supplies/sales are made.
10. It is hoped the above amply clarifies the taxability on cottonseed, in the
composite mills, and the extent of tax credit/adjustment permissible in respect of cake
and sludge there from.