The Institute of Chartered Accountants of Bangladesh (ICAB)

Class Synopsis: Professional Stage (Knowledge Level)

Value Added Tax (VAT)
Last Year Questions

May June 2015:

10.

a) Explain tax base of VAT in Bangladesh. 4

b) Write down the names of ten goods and services which are subject to VAT in
Bangladesh. 3
c) As per VAT Law define commercial documents. 3

11. An importer imported 100 pieces of motor cycle at CIF price of Tk.80,000 per piece. The
clearing and incidental charge amounted to Tk.90,000 for the lot. He sold 90 pieces of
cycle to a wholesaler at a margin of 10% exclusive of VAT which is 15% on the value of
sale price. The wholesaler charged 5% commission to sell it to retailer to be sold from
their sale centre. The retailer incurs cost @ Tk.1,000/- for maintenance & salary of
persons of sale centre & charge cost plus 10% margin.
Compute VAT to be borne by the consumer assuming that retailer sold 70 pieces of
cycle in the month of June 2014. 10

Nov-Dec 2014:

9. Write the areas where registration is required for the purpose of VAT. 5

10. Write applicable rate of VAT deduction or collection at source for the following case: 5

(i) Construction contractors.

(ii) Indenting commission.
(iii) Banking service.
(iv) Audit fees.
(v) Sale of goods on auction.

11. A manufacturer sold goods worth Tk.10 lakh to the wholesaler by including VAT @ 15%.
The wholesaler added 10% as mark-up and sold the goods to the retailer by adding VAT
who in turn sold the goods to the consumer by adding mark-up @ 15%. Compute VAT
at each stage and indicate the total VAT paid by the consumer. 10

May June 2014:

10.

a) Under what circumstances registration may be cancelled for the purpose of VAT?. 5
b) SOS Company provides the following information about its production and sales:
Purchase of Raw Materials Tk. 20,00,000 Direct wages Tk. 2,50,000 Administrative
 expenses Tk. 70,000 Selling expenses Tk. 20,000 Depreciation of Machinery Tk. 30,000
The company sells its products by adding 25% margin on cost. The opening and closing
stock of Raw Materials recorded at Tk. 50,000 and Tk. 40,000 respectively. Determine
VAT if the rate is 15% assuming that opening and closing stock of finished goods were
Tk.30,000 and Tk.20,000 respectively. 10

Nov-Dec 2013:

9. Mr. Habib is a VAT registered trader. He has the following transactions in the month of
July 2013: 10

(a) Goods purchased for Tk.57,500 including VAT

(b) The above goods have been sold for Tk.80,500 including VAT
(c) Tk.3,000 deposited to Bangladesh Bank for VAT Current A/c
(d) Out of the sold goods Tk.4,600 have been returned
(e) VAT return submitted after adjusting the input and output VAT.
Compute the balance of VAT Current Account and give the journal entries of these
transactions.

10. Under what situations, Input Tax Credit is not allowed under the Value Added Tax Act,
1991? 5
11. What are the duties and responsibilities of VAT assessee? 5

May June 2013:

8.

a) Define Value Added Tax (VAT). Discuss the advantages and disadvantages of VAT. 2
b) Discuss some important features of VAT in Bangladesh. 2
c) What are the different types of value added tax. 2
d) What do you mean by presumptive/Fixed VAT? 2
e) What are the services which are exempted from VAT? 2

9. On January, 2011, Rahman International (Pvt.) Limited imported raw materials for
school bags amounting to Tk. 1,00,000 and sold it to Agfa Limited for Tk. 1,20,000.
Using these materials, Agfa Limited made 150 pieces of school bags and sold it to
Yousuf & Sons, a wholesaler, for Tk. 1,70,000. Yousuf & Sons sold the bags to a retail
seller Jaman International for Tk. 2,00,000. Jaman International sold all the bags to
various customers for tk. 2,50,000. In each case and at each stage 15% VAT is to be
considered. Compute VAT in each case. 10
Nov-Dec 2012:

7. Define the following terms as per Section 2 of the VAT Act, 1991: (4X2) 8

(a) Tax;
(b) Invoice;
(c) Person;
(d) Commercial Importer.

8.

(a) What is the time of payment of value added tax on goods in accordance of sec 6 of VAT
Act 1991? 5
(b) Who is required to pay VAT as per sec 3 of VAT Act 1991. 5
(c ) What are the provisions to get input tax credit under section 9 of the VAT Act 1991? 5

May June 2012:

8.

a) Why VAT is an indirect tax? Give an example showing the VAT payable at different
stages. 3
b) What do you mean by taxable goods and services? 3
c) Who are required to register for the purposes of VAT? Who are required to pay VAT? 3

9.

a) Define truncated value. Mention six items with rate of VAT under truncated value
system. 5
b) Define input tax and supplementary duty. 3
c) Differentiate between VAT and turnover tax. 3

Nov-Dec 2011:

10. Define the following terms of VAT: 8

(a) Tax;
(b) Invoice;
(c) Person;
(d) Commercial importer;
(e) Input
(f) Input Tax
(g) Taxable Goods
(h) Taxable Service.
11. Who are obligated to pay VAT in accordance with the provision of Section 3 of the VAT
Act, 1991? 4
12. Discuss the formalities relating to Turnover Tax: 10

a. when and how Registration for Turnover Tax is done?

b. When Turnover tax is paid?
c. How Turnover Tax is paid?
d. What are the books and documents are required to be maintained for Turnover Tax
purpose?
e. What are the penalties for false declaration of Turnover Tax?

May June 2011:

10. Define the following terms in light with VAT: 5

i) Output Tax
ii) Tax Period
iii) Turnover
iv) Goods
v) Total Receipts

11. Discuss the formalities in respect of VAT Registration: 15

a) When Registration are required for the purposes of VAT?

b) Persons required to register for the purposes of VAT?
c) Documents to be submitted for VAT registration?
d) When registration may be cancelled for the purpose of VAT?

Nov-Dec 2010:

9. ABC Ltd. produces Duplex Board, declaring its price at Tk.100,000 per metric ton.
Received an order on 20 June, 2008 from Lafaz Surma Cement Ltd. to deliver 500 metric
tons of duplex board on 25 June, 2008. It intended to deliver the goods on 25 June,
2009 if VAT could be paid by then. The company had a VAT deposit balance on the
morning of 25 June, 2008 in the amount of Tk.10,00,000.

Calculate the amount to be deposited by the company 25 June, 2008 to enable it to

dispatch the goods on that date. 5
10.

a) Define VAT and Turnover Tax. 4

b) Mr. Habib is a VAT registered trader. He has the following transactions in the month of
July 2009: 10
a) Goods purchased for Tk.57,500 including VAT
b) The above goods have been sold for Tk.80,500 including VAT
c) Tk.3,000 deposited to Bangladesh Bank for VAT Current A/c
d) Out of the sold goods Tk.4,600 have been returned
e) VAT return submitted after adjusting the input and output VAT.

Give the journal entries and show how these transactions will be disclosed in the
financial statements.

11. What do you mean by Truncated Value. Give five examples of this system. 5

May June 2010:

9.

a. Define the following terms relating to VAT: 5

i) Input
ii) Input Tax
iii) Current Account
iv) Commercial Documents
v) Zero rated taxable goods or services.

b. When Registration is required for the purposes of VAT? 2

c. When Registration of VAT may be cancelled? 3

10. An Electronic Goods importer Mr. Akber purchased electronic parts at the month of
December of2008 and sold it to Khaer & Co. for Tk. 40,00,000. Using these parts Khaer
& Co. assembled 400 Pc of colour TV and sold it to East‐ West Electronic Co. for Tk.
56,00,000/‐ who is a wholesaler. East‐ West Co. sold that goods (TV) to retail saler
Lemo Int. for Tk. 80,00,000/. In each case and each stage 15% VAT was counted.
Determine VAT in each case. 10