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Value Added Tax

Value Added Tax

Value Added Tax Value Added Tax Calculation of net tax and Payment Slide No.1/42

Calculation of net tax and

Payment

Slide No.1/42

Valuation of taxable

supply (section 32 )

Session: M1-1

Slide No.2/24

Tax Fraction -

Tax Fraction means the amount of money

calculated in accordance with the formula = R/ 100+R

where R

is the VAT rate . [section 2(29)]

Value For Taxable Supply = Consideration - [consideration xTax fraction ] – Consideration always Tax Inclusive value of any supply .

– For related buyer and seller it will be the fair market price .

 

VAT = Consideration (Tax inclusive amount) x tax- fraction

 

For non-taxable supply:

Value = Consideration

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Example -

Session: M1-1

Slide No.3/24

If the

rate is

consideration against a supply is Tk -100 , VAT

15%, then

Tax fraction is

= 15/(100+15) =3/23

Value = Consideration - [consideration xTax fraction ]

Or

100 -

[100

x

(3/23) ]

Or

100 - [100

x

0.1304 ]

Or

100 – 13.04 = 86.96

VAT =

Consideration x tax-fraction

=

100 x (3/23)

= 13.04

tk .

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Determination of Value for VAT of taxable imports

Section28

Session: M1-1

Slide No.4/24

The base value for VAT

at

import stage =

assessable value + the amounts of customs duty+ supplementary duty+ other taxes except VAT and Advance income tax. The assessable value is the value determined for of import duty.

Advance Tax –

A tax

at

a

rate of 3%

shall

be payable and collected in advance on

every taxable imports which is called Advance Tax.

Every VAT registered person or a person required to be registered or turnover enlisted person who makes a taxable import for his economic activities have to pay this tax.

It is the payable VAT or turnover tax against supply of imported goods

which

is adjustable.

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Net payable tax sec 45 , rule 20

Session: M1-1

Slide No.5/24

The amount of net payable tax for any tax period shall be assessed in the following manner –

(a) by adding together all the payable output taxes and Supplementary duty ;

(b) by subtracting all the entitled input tax credits from the summation of above clause (a);

(c) by adding together all of the increasing adjustments ;

(d) by subtracting all of the decreasing adjustment .

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NET PAYABLE, CREDIT && ADJUSTMENTS NET PAYABLE, CREDIT ADJUSTMENTS Routine Transaction Routine Transaction VAT on Supply
NET PAYABLE, CREDIT && ADJUSTMENTS
NET PAYABLE, CREDIT
ADJUSTMENTS
Routine Transaction
Routine Transaction
VAT on Supply of goods
and services
(Output Tax )
VAT paid on business
purchases
(Input Tax – Credit)
All Positive
Adjustments
All Negative
Adjustments
Special Transaction
Net VAT
Increase Tax
Liability
Decrease
Tax Liability

Slide No.6/42

Payment

Payment

Payment Payment Procedure  Payment should be done before return submission Within 15 th of next
Procedure  Payment should be done before return submission Within 15 th of next month of
Procedure
Payment should be done before return
submission
Within 15 th of next month of tax period
If the 15 th day of the next month is a public holiday,
No advance payment, no account current
Online Payment preferable.
Acknowledgment slip from computer system will be
treated as a valid document in case of online payment .
s45(2), r20

Slide No.7/42

Payment Process

Concepts

for online payment ( not finalized yet )

Session: M1-1

Slide No.8/24

VAT Wing requires the following types of Payment information: Payment amount, Payment Challan/advice Number, BIN, Name of Taxpayer, VAT economic code, name/code of Payment source.

Payment information From NBR-Sonali bank portal to NBR revenue acounting system .

NBR revenue Accounting system allocates payments to taxpayer account.

Daily reconciliation Required between NBR-Sonali Bank portal and NBR revenue

accounting system . Daily reconciliation Required between Revenue Accounting And Taxpayer current account .

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Concepts for online payment processing …………

Session: M1-1

Slide No.9/24

payment status as posted to Taxpayer’s account, Post payment status of

Taxpayer’s Current account, Updated taxpayer Current account have shown to taxpayer . CPC takes steps for exact posting of payment to a taxpayer’s account.

Payment information From IBAS ( including book transfer ) will reconciled against Payment information From NBR-Sonali Bank Portal

If any amount posted incorrectly Payment account

it will transferred to an Unidentified

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CREDIT

CREDIT

CREDIT CREDIT Negative Conditions: No input tax credit shall be allowed against an acquisition or import,
Negative Conditions: No input tax credit shall be allowed against an acquisition or import, if, 
Negative Conditions:
No input tax credit shall be allowed against an acquisition or
import, if,
Such acquisition or import relates to a passenger vehicle,
or its spare parts or for the repair and maintenance
services of such vehicle
Such acquisition or import relates to entertainment or is
used to provide entertainment
Such acquisition relates to a person’s membership or right
of entry in a club, association or society, of a sporting,
social or recreational nature
S46(3)
Slide No.10/42
CREDIT CREDIT Negative Conditions: No input tax credit shall be allowed against an acquisition or import,
CREDIT
CREDIT
Negative Conditions:
No input tax credit shall be allowed against an acquisition or
import, if,
 Such acquisition relates to transportation services
 Such
acquisition
relates
to
a
goods
subject
to
supplementary duty under special provisions enunciated
by board under section 58 [Special Scheme for Tobacco &
Alcohols]
S46(3)

Slide No.11/42

PARTIAL INPUT TAX CREDIT

PARTIAL INPUT TAX CREDIT

PARTIAL INPUT TAX CREDIT PARTIAL INPUT TAX CREDIT Partial Input Tax Credit  Where a registered

Partial Input Tax Credit

  • Where a registered person pays or is liable to pay a part of the consideration for a taxable supply, allowable input tax credit will be calculated on the basis of that amount of consideration.

  • An input tax credit can be claimed against an import or acquisition in a tax period, but if it is not entitled in full, the allowable amount will be calculated using the following formula:

Partial Input tax Credit Amount = I×T/A

I=

Total input tax on import or acquisition

T = Total paid consideration against

all taxable

supplies in that tax

period or total period

, A = Total

value against all supplies

in that tax

s47(1), (2) & (3)

Slide No.12/42

PARTIAL INPUT TAX CREDIT

PARTIAL INPUT TAX CREDIT

PARTIAL INPUT TAX CREDIT PARTIAL INPUT TAX CREDIT Problem-1 [ section -47(1) ] (a) A registered
Problem-1 [ section -47(1) ] (a) A registered company makes a purchase amounting tk. 9000/- in
Problem-1
[ section -47(1)
]
(a) A registered company makes a
purchase amounting
tk.
9000/- in a
tax
period and paid or payable consideration in that tax period is tk. 6000/- supplies.
If standard VAT rate is 15%, what will be the amount of creditable input tax/VAT
in
that tax period ?
Total amount of input Tax, I = 9000 × ( 15/115)= 1173.91
paid consideration
T
= 6000
Total
consideration
A
=
9000
Therefore, Partial Input tax Credit
= I x T/A=
1173.91 x 6000/9000
= 1173.91 x 0.6667 = 782.61

Slide No.13/42

Problem-2 [ section -47(2) ]

Session: M1-1

Slide No.14/24

A registered company makes total sales tk. 9000/- consisting of taxable (tk. 6000/-) & exempted (tk. 3000/-) supplies. The total Value of inputs on which VAT have been paid is tk. 6300/-. If standard VAT rate is 15%, what will be the amount of creditable input tax/VAT?

Total amount of input Tax, I = 6300× ( 15/115) = 821.74

 

Total Taxable Supply, T

= 6000

Total Supply, A

= 9000

Therefore,

Partial Input tax Credit

= I x T/A

= 821.74 x 6000/9000

= 821.74 x 0.6667

= 547.85

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ADJUSTMENT

ADJUSTMENT

ADJUSTMENT ADJUSTMENT Adjustment Event "adjustment event" means any one of the following events, namely— (a) cancellation
Adjustment Event "adjustment event" means any one of the following events, namely— (a) cancellation of any
Adjustment Event
"adjustment event" means any one of the following events,
namely—
(a)
cancellation of any supply;
(b)
alteration in the amount of consideration for any supply;
(c)
return of any supplied goods or any
supplier;
part thereof to the
(d)
conversion of a supply into zero-rated or exempted one as a
result of alteration in the nature of such supply; or
(e)
any other prescribed event;
situation of adjustment - s2(87)

Slide No.15/42

ADJUSTMENTS

ADJUSTMENTS

ADJUSTMENTS ADJUSTMENTS Increasing Adjustments (IA) " increasing adjustment " occurs in the following situation - (a)
ADJUSTMENTS ADJUSTMENTS Increasing Adjustments (IA) " increasing adjustment " occurs in the following situation - (a)

Increasing Adjustments (IA) "increasing adjustment" occurs in the following situation -

  • (a) in respect of withholding tax;

  • (b) required for an annual re-calculation;

  • (c) if payment is not made through banking channels;

  • (d) for any goods applied to a private use;

  • (e) on being registered;

  • (f) on cancellation of registration;

  • (g) for the change in the VAT rate;

  • (h) for the payment of any interest, monetary penalty, fine, fee, etc; or

  • (i) any other prescribed increasing adjustment;

s2(71),
s2(71),

Slide No.16/42

ADJUSTMENTS

ADJUSTMENTS

ADJUSTMENTS ADJUSTMENTS Decreasing Adjustments (DA) “ decreasing adjustment” occurs in following situation - (a) for the
ADJUSTMENTS ADJUSTMENTS Decreasing Adjustments (DA) “ decreasing adjustment” occurs in following situation - (a) for the

Decreasing Adjustments (DA) decreasing adjustment” occurs in following situation -

  • (a) for the amount paid as advance tax;

  • (b) allowed to a telecommunications product supplier;

  • (c) in respect of withholding tax;

  • (d) allowed as a result of an annual re-calculation;

  • (e) on being registered;

  • (f) in relation to second-hand goods purchased for re-sale;

  • (g) in relation to an indemnity payment under a policy of insurance;

s2(103),
s2(103),

Slide No.17/42

ADJUSTMENTS

ADJUSTMENTS

ADJUSTMENTS ADJUSTMENTS Decreasing Adjustments – Contd. (h) in relation to a monetary prize paid for a
Decreasing Adjustments – Contd. (h) in relation to a monetary prize paid for a lottery, lucky
Decreasing Adjustments – Contd.
(h)
in relation to a monetary prize paid for a lottery, lucky draw, raffle,
or similar undertaking;
(i)
where there is a decrease in the VAT rate;
(j)
allowed to refund of SD;
(k)
claimed for a negative net amount carried forward from a previous
tax period;
(l)
allowed for VAT overpaid in a previous tax period; or
(m)
lottery , lucky draw etc
(n)
any other prescribed decreasing adjustment.
s2(103),
Slide No.18/42

WITHHOLDING VAT

WITHHOLDING VAT

WITHHOLDING VAT WITHHOLDING VAT Withholding Entity & Certificate Withholding entity means- (a) a government entity; (b)

Withholding Entity & Certificate

Withholding entity means-

  • (a) a government entity;

  • (b) an non-government organization approved by NGO Affairs Bureau or Directorate of Social Welfare;

  • (c) a bank, insurance company or similar financial institution;

  • (d) a post-secondary educational institution;

  • (e) a public limited company; or

  • (f) an establishment registered under LTU-VAT;

Withholding certificate means a certificate in respect of an amount of tax withheld at source;

s2(21) & (22)

Slide No.19/42

WITHHOLDING VAT

WITHHOLDING

VAT

section 4949

section

WITHHOLDING VAT WITHHOLDING VAT section 4949 section (1) Withholding entities are responsible to deduct at source
WITHHOLDING VAT WITHHOLDING VAT section 4949 section (1) Withholding entities are responsible to deduct at source

(1) Withholding entities

are responsible to deduct at source

(2) Both import and domestic supplies are subject to VDS

(3) Both

Zero rated and exempted

VAT/VDS

supplies are

not

subject to withholding

(4) Value of supply up to Taka 10 thousand are not subject to VDS

s49
s49

Slide No.20/42

VDS

Session: M1-1

Slide No.21/24

( 5) 1/3 of total applicable VAT to be withheld at source (6) Withholding entities shall not receive any supply and pay against any supply if -

(a) a combined tax invoice

and withholding certificate is

not issued or (b) from a supplier not registered or enlisted

(7)

supply against only

contract , tender and work order is

subject to withholding VAT

(8) Supplier

will

get

negative adjustment and withholding

entity shall make positive adjustment at the time of net payment calculation .

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Supplementary Duty section- 55

Session: M1-1

Slide No.22/24

  • SD rates are:

    • Percentage Rates:

10%,

20%,

30%,

45%,

60%, 100%, 250%, 350%, 500%,

  • Lump-sum Rate: Tk. 600 per SIM

  • Second Schedule of the Act

  • Liability – same as VAT

  • Time, stage and process of payment – same as VAT

  • No SD

on zero rated supply .

  • SD is payable on only one stage of supply

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Value for Imposition of SD

Session: M1-1

Slide No.23/24

For Import

  • Value should be equals to the AV + CD +RD

  • For Domestic supplies

    • SD = SDIV x tax-fraction

Tax-fraction = R/(100+R) (= 30/130), where SD rate is 30%

  • For Retail Price based goods:

    • SD = Retail Price x

SD Rate

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Value for Imposition of SD

(a)In case of import,

Session: M1-1

Slide No.24/24

Value for SD = AV + CD + RD + other taxes

 
 

(except VAT & AIT)

(b) In case of Supply

value for VAT = consideration - (consideration× Tax fraction )

 

Value for SD = Value of supply without VAT – SD

 

(c) In case of the supply of any good or service subject to supplementary

duty is made without any consideration or with inadequate consideration‚

Value for SD = fair market price – tax-fraction

 

(d) In case of Retail prices

-

Value for SD

= Retail price

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Session: M1-1 Hints ( Import stage): AV 50,000.00, CD 25%, RD 5%, SD 20%, VAT 15%,
Session: M1-1
Hints
(
Import stage): AV 50,000.00, CD 25%, RD 5%, SD 20%, VAT 15%, AT 3%
Slide No.25/24
TTaxax Type
Type
Base Value
Base Value
Base Value
Base Value
TTaxax Rate
Rate
TTaxax Amount
Amount
Formula
Formula
CDCD
AVAV
50,000.00
50,000.00
2525
12,500.00
12,500.00
RDRD
AVAV
50,000.00
50,000.00
55
2,500.00
2,500.00
SDSD
AV+CD+RD
AV+CD+RD
65,000.00
65,000.00
2020
13,000.00
13,000.00
VAT
VAT
AV+CD+SD+
AV+CD+SD+
78,000.00
78,000.00
1515
11,700.00
11,700.00
RDRD
ATAT
(AV+CD+SD+
(AV+CD+SD+
78,000.00
78,000.00
33
2,340.00
2,340.00
RD)
RD) ×× 3%3%
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Calculation of SD for supplies

Session: M1-1

Slide No.26/24

  • Case 1: Supply made on fair market price

    • Provided Info:

Price is Tk. 350.00, SD rate is 60%,

VAT is 15%

  • VAT = TIV x tax-fraction= 350 x 15/115= 45.65/-

So, SD inclusive price = (350-45.65) tk= 304.45 tk

  • SD = TIV x tax-fraction= 304.65 x 60/160= 114.25/-

  • Therefore, Total Tax = VAT + SD= Tk.(45.65 + 114.25)

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= Tk. 159.90

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Hints: MRP is provided

Session: M1-1

Slide No.27/24

Case 2:

Supply made on Retail Price (s57[ga])

  • Provided Info:

    • Price is Tk. 350.00, SD rate is 60%

    • VAT is 15%

  • 350 x 15% = 52.5/-

  • VAT =

    • = 350 x 60% = 210/-

    SD

    Therefore, Total Tax = VAT + SD

    = Tk. (52.5 + 210)

    = Tk. 262.50

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    Supplementary Duty

    • Special Schemes for-

    Session: M1-1

    Slide No.28/24

    • tobacco products or any other similar product, including products blended with tobacco

    • alcoholic drinks, ingredients of alcoholic drinks other similar product

    or any

    • In special scheme, board may determine –

      • Maximum Retail Price (MRP) of products

      • MRP should be used for the base of calculation of VAT and SD

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    Supplementary Duty

    Session: M1-1

    Slide No.29/24

    • Special Schemes may include matters related to-

      • Stamps

      • Banderols

  • If fails to pay SD during supply, it should be presumed that that supply was made for a Fair market price

  • No SD imposable if goods is destroyed or damaged for fire, natural disaster or finished off without being supplied to a person

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    adjustment for SD

    Session: M1-1

    Slide No.30/24

    • Negative adjustment for SD is applicable if-

      • It meets all requirements of Drawback under Customs Act

      • Goods imported is re-exported

      • Applied in prescribed form within 6 months of export

      • Relevant documents submitted with application

  • Commissioner should disposed of the matter within 30 days of receiving application

  • Otherwise, it should be assumed that application is granted

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    Session: M1-1

    Slide No.31/24

    Any question

    or comments ?

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    Thank

    you .

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