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.
Last updated
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.
Practise Taxation
50 free Taxation MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on this paper prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for it.
Related questions
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?
A registered supplier charges sales tax on a taxable sale. What is this charged amount generally called for the supplier?
A tax charged at a fixed amount for every kilogram of an imported product is an example of a:
A tax imposed at the same percentage rate on all levels of taxable income is called what?
A taxpayer has paid more tax during the year than the final tax liability. What is the usual treatment of the excess amount?