Value Added Tax

Calculation of net tax and

Payment

Slide No.1/42
 Session: M1-1

Valuation of taxable supply (section 32 ) 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

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 Session: M1-1

Example - Slide No.3/24

If the consideration against a supply is Tk -100 , VAT

rate is 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 .

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 Session: M1-1
Determination of Value for VAT of taxable imports Slide No.4/24

Section28

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.

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 Session: M1-1
Slide No.5/24
Net payable tax sec 45 , rule 20

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 .

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 NET PAYABLE, CREDIT & ADJUSTMENTS

VAT on Supply of goods VAT paid on business

Routine Transaction
Routine Transaction and services purchases
(Output Tax ) (Input Tax Credit)

All Positive All Negative

Special Transaction Adjustments Adjustments

Net VAT
Increase Tax Decrease
Liability Tax Liability
Slide No.6/42
 Payment

Procedure
Payment should be done before return submission
Within 15th of next month of tax period
If the 15th 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
 Session: M1-1

Payment Process Slide No.8/24

Concepts for online payment ( not finalized yet )

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 .

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 Session: M1-1
Concepts for online payment processing Slide No.9/24

payment status as posted to Taxpayers account, Post payment status of

Taxpayers Current account, Updated taxpayer Current account have
shown to taxpayer .
CPC takes steps for exact posting of payment to a taxpayers account.
Payment information From IBAS ( including book transfer ) will reconciled
against Payment information From NBR-Sonali Bank Portal
If any amount posted incorrectly it will transferred to an Unidentified
Payment account

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 CREDIT

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 persons 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

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

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 = IT/A

I= Total input tax on import or acquisition

T = Total paid consideration against all taxable supplies in that tax

period or total , A = Total value against all supplies in that tax
period
s47(1), (2) & (3)

Slide No.12/42
 PARTIAL INPUT TAX CREDIT

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
 Session: M1-1
Problem-2 [ section -47(2) ] 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

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 ADJUSTMENT

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 part thereof to the
supplier;
(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

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),
Slide No.16/42
 ADJUSTMENTS

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),
Slide No.17/42
 ADJUSTMENTS

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 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 section 49

(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 supplies are not subject to withholding
VAT/VDS

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

s49
Slide No.20/42
 Session: M1-1
VDS 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 .

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 Session: M1-1

Supplementary Duty section- 55 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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 Session: M1-1

Value for Imposition of SD 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

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 Session: M1-1

Value for Imposition of SD Slide No.24/24

(a)In case of import,

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

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 Session: M1-1
Hints ( Import stage): AV 50,000.00, CD 25%, RD 5%, SD 20%, VAT 15%, AT 3% Slide No.25/24

Tax Type Base Value Base Value Tax Rate Tax Amount
Formula
CD AV 50,000.00 25 12,500.00
RD AV 50,000.00 5 2,500.00
SD AV+CD+RD 65,000.00 20 13,000.00
VAT AV+CD+SD+ 78,000.00 15 11,700.00
RD
AT (AV+CD+SD+ 78,000.00 3 2,340.00
RD) 3%

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 Session: M1-1

Calculation of SD for supplies 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)

= Tk. 159.90

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 Session: M1-1

Hints: MRP is provided

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%
VAT = 350 x 15% = 52.5/-
SD = 350 x 60% = 210/-
Therefore, Total Tax = VAT + SD
= Tk. (52.5 + 210)
= Tk. 262.50

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 Session: M1-1

Supplementary Duty Slide No.28/24

Special Schemes for-

tobacco products or any other similar product, including
products blended with tobacco
alcoholic drinks, ingredients of alcoholic drinks or any
other similar product
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

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 Session: M1-1

Supplementary Duty 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

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 Session: M1-1

adjustment for SD 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

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB
 Session: M1-1
Slide No.31/24

Any question or comments ?

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 Thank you .

CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop-ESCB