In a sales tax system, input tax generally refers to tax paid by a registered business on:
Correct answer: A. Its eligible business purchases
- A. Its eligible business purchases
- B. Its taxable sales to customers
- C. Its annual accounting profit
- D. Its employees' personal expenses
Explanation
Input tax is sales tax paid on eligible purchases or inputs used in making taxable supplies. Tax charged on the business's own sales is output tax, which is a separate concept.
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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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