A registered business has output sales tax of Rs. 180,000 and eligible input tax of Rs. 125,000 for a tax period. Ignoring other adjustments, what is the net sales tax payable?
Correct answer: C. Rs. 55,000
- A. Rs. 180,000
- B. Rs. 125,000
- C. Rs. 55,000
- D. Rs. 305,000
Explanation
Net sales tax payable is calculated by subtracting eligible input tax from output tax: Rs. 180,000 minus Rs. 125,000 equals Rs. 55,000. The common trap is to report output tax without allowing the permitted input tax adjustment.
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About Taxation
Taxation covers the principles used to assess and collect taxes from individuals, businesses and transactions, with emphasis on income tax and sales tax concepts in Pakistan. Questions involve taxable income, exemptions, deductions, tax liability, withholding, returns, assessment, tax avoidance versus evasion, and the distinction between direct and indirect taxes.
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