e e e e e e okay good morning everyone you all are warmly welcome to today's webinar series uh so today's session will be conducted by Mr vage today's session is on value added tax as you all know so uh Mr V he is a certified Tax Advisor and a member of Cs Sri Lanka and also he is a member of uh a Sri Lanka so Mr vage you're warmly Welcome to the session and you could start the session now hello good morning to all of you uh hope all of you can um listen to me you can hear me and uh as aroni correctly mentioned today our topic is all about value better tax and what we need to discuss today basically how to calculate that liability uh for a general uh example or general business in addition to that we are going to discuss on financial services and tourism battery fund scheme likewise there are many areas where we need to touch during course of the day actually we having only one hour's time but I'll try my level best to complete all the areas and uh at the same time uh as usually because this is what I have done in single Medium as well so when I'm doing it I'm always I always want to interact with you so I'll be sharing my presentation right now and what you need to do basically uh you just go to uh this particular website if you're having your mobiles in your hand just go to www m.com www m.com then uh you can use the code of 614 541 61 4541 so when you use that code the this particular presentation will comes to your mobile and you can see this one if you join with me just put a heart Mark or else just click that one then I can identify how many participants are interacting with me right now I'll give one to two minutes to for you all all of you to log to this webinar because then only we can do this interactively and I'll be asking some questions as well so when I'm asking the questions uh if you if you are in position to get the first place because I'll be selecting who is the who is giving fastest answer so out of that I'll be giving this book this also written by myself earli also I gave the same thing so one of you can get this book if you are interactively uh connecting with me right okay I can see two people have joined right now okay three very good because my first slide also it's going to be a question because you need to start with the questions so with that only we can go ahead I'll be wait another two 2 to 3 minutes for all of you to join good six numbers are there okay I think it's better to start now anyway I'm starting with the questions as I told you [Music] right you can put your [Music] name e [Music] oh [Music] right this is my question [Music] a [Music] [Applause] right anyway small technical delay is there but most of you have correctly mentioned the top Revenue generating tax type to Sri Lanka inue department is as you correctly mentioned that not the income tax I'm just uh showing you the some of the figures which are relevant to uh the government income you can see here out of total revenue the main component is receiving from vet Val tax even as a percentage of GDP also we are getting the vet so the correct answer is Valu tax so you can understand the gravity of this subject and the importance of this tax type because this is impact to everybody in Sri Lanka and that most of the Revenue also is being collected uh from this Source we'll move to the next slide now today as I told you I'll be going to discuss two uh few items under that back on non-financial Services Supply so this is our basic this is our main topic because under this we have to discuss so many areas non-financial services and the other one is veton financial services so Von Financial Services is mainly applicable for the finance sector but non-financial services are applying to even retail and wholesale other service providers manufacturers everybody is coming under the first one B on nonfinancial Services right we'll see what are those uh items and the components of that now valuat tax the main section which is relevant to uh nonfinancial B is under section two the section two is is elaborating or else discussing what is mean by taxable supply and supply of goods or services in the C of carrying on or carrying out a taxable activity and the taxable activity is carried on or carried out in Sri Lanka and Supply is made by a registered person and the last one is importations of goods into Sri Lanka so what we are going to discuss today now if you look at these four so the importation of goods if you take it's mandatory for you to get the registration if you are doing importation but other cases there is a threshold where you need to uh comply with that threshold you need to meet that threshold then only you have to register for this one right basically you need to understand what is mean by taxable activity and what is mean by Supply taxable Supply those basic concept you need to digest then only you can understand the other part right we'll move to the next one uh supply of goods now uh supply of goods what you need to understand or else what you need to remember in order to register for Val tax any person who outs taxable goods or services in excess of 12 million perom or else we can say 3 million per quarter so if your turnover is exceeding uh 12 million perom or else 3 million per quarter then you need to register for that then you can see trade business profession or vocation is required to register for that and most important thing is that there are certain goods and services which are Exempted from that such Exempted turnover should be excluded in calculating the anual Val it's like this when you are calculating your aggregate turnover total turnover you have to exclude the xmm supplies under the Valu Tex but anyway when you consider your total Supply oral turnover you need to exclude Exempted Supply and importers as I told all importers are required to register for vet if the tax that is we call temporary vet because if somebody is not registered for vet but suppose if he wants to import something to Sri Lanka he needs to get the temporary vet then only he can clear the goods so it's mandatory you need to remember if you are importer if you don't have the permanent vet number you need to get the temporary vet and proceeding right so basically what you need to understand this is for your exam purpose 12 million perom and 3 million per quarter but remember this threshold has been changed with effect from 1st January 2020 so 1st January 2020 onwards now the limit has gone up to 300 million now any uh taxable Supply which is beyond 300 million only you need to register and per quarter it's only 75 million but uh the reason that I have not given those figures in this slide is these are not relevant to your exam but the Practical scenario you need to keep it in your mind the 12 million threshold is no more applicable right now now the threshold has gone up to 300 million perom and 75 million per quarter right we'll move to the next one and in this case another point that I want to tell you now here the 12 million mean if you divide it by 12 month is 1 million 1 million mean if you divide by number of days of 30 it's 33,333 it says if somebody is having sale value or the turnover figure is more than 33,333 per day you have to register for that if you are within that category so we'll see what are those categories so what you need to make sure what you need to remember is 12 million is the threshold and 3 million is for the quarter then uh retail and whale this is another area where you need to remember with effect from 1 November if you are doing retail and wholesale activities the 3 months period threshold is 12.5 million so that mean basically per anom threshold is 50 million 12.5 into 4 mean 50 million so as I told this is also applied only up to 31st December 2019 1st January 2020 onward this also has gone up to 300 million perom so anyway this threshold has been changed but for your exam purposes you need to remember retail and wholesale activities because in your exam they will be testing only up to uh the last year so last year the threshold was 12.5 million per quarter and the per anom is 50 million right and another important question you all can try now what is the minimum manual turnover n [Music] right you need to listen to me properly otherwise you will not be able to answer the correct one because as I told the particular threshold has been changed with effect from 1 January 2020 to 300 million so the 12 million is applicable for until last year so the question was all about the new year what was the threshold and as I told this will not be tested in your exam but you need to keep it in your mind this is the current low okay right we'll see what are the consequences of registration once registered such person must charge and collect that even though the value of Supply does not exceed the registration threshold this is the requirement now say for an example if in last year if your turnover per anom is 12 million now you have exceeded you have got the vet registration now after that even for next month if your turnover is only 10,000 you need to pay the bet that's what it says because another concept that you need to understand value tax it's a indirect tax it's not a direct tax direct tax mean it's basically charge on your income but this is based on your expenditure or else uh whatever the goods and services consumption so when because of the that the charging uh source is different from the indirect tax even the businessman or else the retailer wholesaler or else whoever the businessman is also acting as a collector on behalf of the government so what they are doing when they sell the goods and services they will add particular vet amount and sell it to the customer so they are collecting it and they must remit it to the department because they are working as a intermediary so this is what we need to understand so uh if you have registered if you got the registration you must charge that and you must pay to the department as well so D registration cannot be done during first 12 months period of registration now if you have if you got the registration suddenly you can't do the D registration the cancellation of registration or completion of 12 months or more subject to liability on deem disposal of remaining stock assets Etc prior to cancellation did you understood what is that the cancellation of registration on completion of 12 months of subject to liability of De disposal it's like this just try to understand this concept if you register for that that purposes basically you can claim the input V so what is input V now as I mentioned when you are selling you have to charge but at the same time when you are getting the goods when you are buying your goods you can uh it's like this suppose now you are buying 100 100 rupees worth item so they will be adding 15% vet to you so you are putting your account you are taking into consideration only the 100 rupees as your cost but 15 rupees you are putting into the vet control account and when you are making payment because when you are selling that item just imagine the 100 value good you are selling at a 200 rupees so 200 rupees you are again charged 15% so 30 Rupees is there so 30 is you are payable and 15 is you can claim so you are paying only the balance 15 then you can understand once you get the that registration you have a opportunity to claim the input Val Now by they have put this kind of a rule just imagine once you get the registration suddenly after 12 months if you close down the business or else if you want to get the re-registration there can be some goods and services which you have already purchased and you have claimed the input vet as well just imagine you had a 100,000 stock and the input V also there then when you ask for the deregistration it says deem disposal of remaining stock prior to cancellation even when you are got the D registration it says before you apply for the D registration when you are selling that item even if you don't have the W registration at that time that is liable for w because you have already claimed the input back so this is what you need to understand the de disposal of remaining stocks but in your exam purpose basically what you need to understand is uh what is the threshold and uh during 12 months period you can't apply for the deregistration right we'll move to the next slide interpretation so I'll be going to discuss interpretation with regard to what is mean by taxable Supply and uh taxable period and year of assessment and the last one time of Supply so these are the four basic things that I want to discuss with you right we'll move to the next part what is mean by taxable Supply the taxable Supply mean any supply of goods or services made in Sri Lanka which is chargeable with tax and include Supply at the rate of 0% other than an XM Supply so these wordings are really important so what is mean by 0% and what is mean by XM Supply so taxable Supply means it includes only goods or services made in Sri Lanka which is chargeable Supply but not the exm supply so what is mean by XM I'll be discussing what is mean by exm Supply 0% mean now most of the students they have misunderstood the concept they thought that okay zero rate and the ex same Supply both are same no these are this is a two different concept Z rated mean uh anyway we have a l discussion explanation is there but for you to get some sort of idea % mean basically you can't charge vet but even though you are not charging uh you can claim the input V but in exm Supply what happens exempt if the particular Supply is exempt you can't claim input as well so this is the basic difference between the Zer rated and the XM Supply and why they are giving the Zer rated because mostly zero rated this giving for exporters and people who are getting foreign currency to uh who are people who are bringing foreign currency to Sri Lanka and there are many categories which C rated is applicable so I'm going to discuss those areas in detail but in here what you need to understand is when you calculate your taxable Supply XM Supply cannot be considered as a part of the taxable Supply right we'll move to the next one what is mean by taxable period now this is also very simple taxable period just try to remember if you're having a short note just put it only divide into two you have only two p one is one month for one month period and the other one is quarterly so one month is applic applicable applicable basically for the Z rated supplies and any person commun business or projects undertake uh complete comply with the requirement of section 227 so I'll little explain what is mean by section 227 so section 227 mean now imagine uh just imagine you are having a condomonium property or else big building site or just imagine a hotel project now you'll be doing this construction project construction work for years sometime it takes two years three years for the construction project then what will happen during that period you will be purchasing lot of items if you don't have the back registration you need to make that payment as well if you buy cement if you buy iron those things you need to pay the BET then your cost will be high and the same time you are not in position to clim it because you don't have Supply during that period so because of that reason uh inue department has given special permission Under the Sun longer period time to make that requirement until they go taable Supply the only the construction inut but for that there is that one so anyway what you need to understand if you are a zero supplier if you are export and section 227 registered person you need go for the monthly basis and most important thing is [Music] if e e hello right hope all of you can see the slides show now there a small technical delay now the next period is one month 3 months period or else quarter hope uh all of you have joined me again right okay now the next one next one is as I mentioned the one month is applicable for those ex exporters and zero rated people and the three months period is applicable other than those people so you can take it as a period of three months commencing respectively on first January first April July and October so 3 month period will be applicable for the following person a person other than a a if person fails to and Ops to submit quartly Returns on approval by the commissioner General if he obtain any approval from commissioner General then also he can uh submit the Returns on cly basis so what you need to basically understand is in order to submit the return you have two options either you can go for a monthly basis or else you have to go for the ctly basis for monthly basis in specifically mention these are the people who can file the returns monthly so that one you need to keep it in your mind at the same time all others are coming under the 3 months period right we'll move to the next one um time of Supply what is mean by time of Supply time of Supply is a different in different occurrences as follows the time of supply of good shall when uh invoice is issued and in respect of goods by the supplier or payment advance for goods is received by the supplier a payment for goods is due to the supplier in respect of such Supply delivery of goods have been affected so whichever is earlier so what is mean by here whichever is ear mean uh you need to look at in which stage goods are been delivered the number one is the invoice is issued in respect of goods by the supplier or payment or the supply is or else the second one is advance and the next one is delivery of the goods okay you need to look at those things yeah right okay the time of Supply what you need to understand as I told uh whichever is earliest at the same time you need to look at however where an invoice is issued in respect of good Supply within 10 days from the date of delivery of such Goods the time of supply of goods shall be the time at which the invoice for is should now let's take one example uh now you have already rendered your service or else you have already uh provided your service or else suppose you have already dispatched your goods in that case if you are issuing your invoice within 10 days of the delivery of those goods the time of Supply is the time at which the invoice was issued not the time that the goods were received so this is the most important thing that you need to remember if the invoice is issued within 10 days of the date of delivery of such Goods okay right then we'll move to the next one then the for services also the same criteria the time of supply of services again you need to look at when they have performed the service number two payment for services then the third one the payment for services of future Services is due so you can understand the difference first one is when you perform your service second one is service of future Services is received and the third one is due still you didn't receive it and the last one an invoice in respect of services issued here also the same criteria if the invoice is issued in respect of service Supply within 10 days from the date of performance of such Services the time of supply of such service shall be the time at which the invoice was issued so this is what you need to understand again uh there can be situation say for an example I'm a chared accountant I am providing some consultancy services so I have already performed my service but I'm am sending the invoices within 10 days of the Service Supply then the invoice date is the date of Supply not the date that I have provided my services this is what you need to understand okay we'll move to the next one supply of services now I I I want to take you through a practical example now what happens supply of services as all of you aware 2019 November 30th until that our vet rate was 15% now it has reduced to 8% with effect from 2019 December 1st now just imagine a situation where you perform your service on 30th then you issued your invoices on 5th December 2019 so when is the then in this example the time of Supply is 5th December not the 30th November 5th December is the time of Supply because you have issued your invoices within 10 days of the providing your service so this is what you need to understand so I'll be testing your knowledge from this also keep it in your mind if goods or services is supplied after that the invoice is issued within 10 days the date of Supply is not the service or the goods dispatch date or the service performed date it should be the invoice date okay right then the next one where a supply is made under an agreement entered into other than higher purchase agreement which provides periodical payments when the payment is due or when the payment is received whichever is earlier but in your exam purpose always you need to remember about the goods and services these are for your additional knowledge this is for other than higher purchase and the goods are supplied under higher purchase agreement when the agreement is entered into so then you need to look at when did you enter for your agreement so that is the uh time of supply and the where the commission General has directed any registered person to account for the tax on payment basis on a payment basis mean Cash basis the time of Supply goods and services supplied by the such person shall be the time at which the payment is respect of such by such Supply is received so what is this so this is another concept where you need to learn Cash basis now mostly if you are going for the V Val tax you need to account on actual basis but there are some organization which they need to get the cash basis approval I'll tell you one example if you take a a company which is providing gorial services to University so government universities they are making long period to make the payment so in that case the particular person who is providing that service if he makes the vet payment on acal basis without collecting money he's paying from his pocket so it's not possible in Practical world so in that case what happens they are getting approval from in Rue Department to go for the cash basis once they get the cash basis approval what they are doing at the time of providing Services they are issuing only the they not issuing the tax invoice that is be called performa invoice they're issuing just performa invoice okay we are providing that services but at the time of receiving the money they issue the tax invoice so that is what they are basically doing and for cash basis people only the time of Supply is at the time of such cash received not the payment or not the supply was performed okay right so these are the basic things that you need to know right we'll move another question quickly n [Applause] [Music] he right many of you have correctly mentioned that one because XM Supply is not included that's what I told in before now Cash basis as I I have already explained that part again just look at the most important thing is if you want to go for the cash basis you must get approval from commissioner general service providers including construction contractors May apply for the now I told you about the janitorial services even if you get the construction industry same thing is happening because just imagine a situation where a Constructor is doing a building construction for a government organization so they are taking two years or some sometimes more than that to make the payment so in that case the particular service provider is not in position to make the payment to in Revenue Department because they are not collecting money so in that case they can get the cash basis approval uh but the most important thing is they need to get the approval from in uh commissioner general for this right we'll move to the next one compulsory registration every person who carries on a taxable activity should register for that if the value of taxable Supply exceeds or like to be exceed the amount stated below so what is mean by like likely to be exceed mean even actual basis you have not exceeded but you might feel that you also feel that based on the invoices you received and everything okay you can see okay my total revenue will be increase more than this for that instant also you are in position to apply for the vet registration I'll tell you one practical example now imagine uh if a company is trying to go for agreement their first Supply is more than 12 million so in that case they can automatically apply for the vet registration because it's is likely to exceed the amount stated because anyway from first transaction 12 million threshold will meet right then the next one such person must notify the commissioner General within 15 days of his liability to be registered now this is also legal requirement if somebody is feeling okay I'm I'll be reaching to this threshold within 15 days of reaching that you must inform notify to in department and get the V registration okay we'll move to the next one in Computing the value supplies determine the both threshold the following should be excluded again I'm telling Exempted Supply should be uh excluded and any excluded supply of local buying and selling activity where the total supply of period 3 months or calendar exempt under the first schedule at least more than 12.5 million so you can see here uh other than 12 e e yeah if the CG is satisfied of the following any following situation he may cancel the registration the registration person has ceased to carry on a taxable activity or the total value of taxable Supply does not exceed the liable limit liable threshold or the continuation of registration May impede the protection of Revenue because continuously no income to the in Revenue Department the facilities under the Customs audience in respect of such person have been suspended by the director general of custom so in these situations Inu Department May cancel your V registration just uh try to keep it in your mind for the exam purposes right we'll move to the next one duties and responsibilities upon cancellation so what are your duties and responsibilities upon cancellation any goods or services if you registered if you apply for the cancellation upon cancellation CG registration by the CGR such person shall return the registration certificate to CG within 14 days that mean for commissioner general of Inland Revenue we must submit our canell vet reg or the vet registration certificate to the in department and stop displaying the certificate of registration and stop issuing tax invoices debit note and credit note those are the things that you need to do right and in case of zero rated Supply irrespective of whether the relevant Supply is listed in the exam Supply it shall in all other respect to be treated as tax taxable Supply and taxes to be computed at the rate of zero I think I told this before also what you need to understand here zero rated mean uh for apply the value should be appli as zero but only thing is allowable input can be claimed and a refund can be claimed from the Department of Department in department but however for the V exm Supply you need to remember no input tax is allowable in the case of imports and Export irrespective of the value of Supply registration should be applied so this is what I told even at the beginning so it's very simple if you're going for the zero ated yes you can claim input but exempt you can't right ministers power to change the rates now you might wonder I told earlier the rate was 15% for your exam purposes they will be testing that 15% rate but right now the rate is 8% who is having that Authority the Minister of Finance the minister by publishing an order to in the gas subject to the approval of the parliament may vary the vet rates specified in the law even in future they might uh increase the V rate because the minister is having that Authority right excluded Supply now I have already discussed two concept what is mean by zero rated and what is mean by exempt exempt I'll be giving some examples as well excluded mean what is that the tax shall not be charged on wholesale or retail supplies of goods other than on the wholesale or retail supply of goods buyer now it's very clearly says other than manufacturer of such Goods then you can importers of such Goods you can likewise they have given you need to look at okay whether wholesale and Retail is there if any organization any any person is there which is fallen into this category Fallen which who is not fallen into this category are coming under the excluded Supply now you can see here any person partnership having total Supply consecutive period of 12 months 12.5 million not less than 12.5 million so less than 12.5 million years you have to exclude not less than 12.5 million only uh acceptable because it says other than on wholesale and retail supply so in your case what you need to do when you are making your vet calculation if you have excluded Supply because I'll be showing you how to file the vet return return in there also you have to mention a separate cage called excluded Supply where you need to put that amount if that particular category is coming under this right then I told you about the exm supply this is another example this is a good example for XM Supply supply of import of wheat wheat PL agricultural energy saving bulbs and Educational Services remember if a tution sector or else the education sector is exempt public passenger transport services that exempt locally manufactured coconut oil likewise if you go through the Val Tax Act there is a separate schedule exm schedule is there it's a whole list we need to go through because in for your exam purposes very few items are listed here right we'll move to the next one how to do the calculation basis of computation what you need to do you have to get the output tax uh and you need to deduct the allowable input F uh I can't see whether the students are interactively joining with me if you are joining with me if you are in interacting with me just put a hard Mark okay I'm getting it okay I thought I'm alone doing this one right anyway it's good you are touching with me right then output tax is there then allowable input tax you can deduct then you are coming to the balance payable so output tax means the that computed on liable supplies and input tax means that paid on purchase of goods and services consumes it's very simple calculation you need to put the output and you need to deduct the input then you are coming to the balance payable right this is a another method that you need to remember now uh as for your syllabus as for your exam purposes we are having two rates one is zero rate and the 15% but if you look at the Practical world now the zero rate is there in addition to that the rate is 8% so that's what you need to remember and uh there is another mechanism which is considered only for some of the uh manufactured uh some of the items that is for rates or else we can say per piece they are charging how much the Val for an example for sale of export oriented manufacturers within the limit permitted by the board of investment of Sri Lanka that should be paid a special rate based on the number of pieces product so uh it's not depend on the total Supply it for the number of pieces so 75 per piece other than panties socks briefs and boxer shorts so likewise they have specifically mention a value per item per piece not for the whole value right that also you need to remember then we'll move to the uh next one adjustment because frequently uh these are the practical scenarios because the bad deps can be there in some cases when you are calculating your taxable Supply or else taxable payable amount in asserting the amount of tax payable the amount of tax of bad debt incurred in the taxable activity can be deducted that means basically if you have any bad dates you can deduct but there is another rule if subsequently received that amount from a from your customer that should be treated as a taxable Supply during the taxable period in which it was received and shall be liable to tax I think you got the idea so if any bad Deb is there actually incur you can deduct when you are calculating your taxable payment amount and at the same time once you receed that amount after you write off then at that point you must pay back for that one and another most important adjustment is for credit notes and debit notes now there can be situation where you need to issue credit notes if you want to reduce the supply value and there can be situation where you need to issue debit notes as well so the law ISS you can do this mechanism only within 6 month of the original invoice issued so remember that one debit note or credit note is to be issued within 6 month of the original invoice to adjust the input tax so these are the basic things that you need to remember right we'll move to the next one question [Music] a [Music] right very good uh you actually listen to me very carefully that's why you have correctly answered that question because I have explained it many times when you are providing service or when you are selling goods and at the time of issuing your invoices within 10 days of the providing of that service or dispatching The Goods the time of Supply is not the supply of service the not the date of Supply you have to consider the invoice date right so that's what the correct answer is invoice date right we'll move to the next one composition of a tax invoice what you need to include in a tax invoice the name address and the registration number of the supplier and the name and address of the person to whom the supply was made and date on which the tax invoice was issued and it serial number so this is very important just first few things are anywhere those are mandatory you need to put the name address registration number and address as well so why the serial number so you must know the concept behind this or else what is the rational behind this now serial number mean now you need to put 1 2 3 4 likewise now in Department may ask you to uh show the whole tax invoices that you have issued in a situation where just imagine if you're not maintaining serial number then inue Department also can't trace your total income so serial number is very important if serial number is missing it says you you might not declare the full income so this has happened in practically in many instances in Leu department is more focusing on the serial numbers whether it's continuing properly if serial numbers are missing they might think you have not declared the income properly okay and the date of supply and the descriptions of the goods or services and the quantity or volume of the supply and the value of Supply tax charge the consideration for the supply and the most important thing the word of taxing invoice you must mention the tax invoice wording in the invoice if it is mentioned only a invoice it's not a valid tax invoice keep it in your mind tax invoice you need to put in your invoice right we'll move to the next one right tax invoices on importers tax invoices where the goods have been imported into Sri Lanka the custom Goods declaration or any other document or authenticated by the director general of custom shall be treated as the tax invoice now you can easily remember this one when you are doing Import in Import and Export business basically import business The Source document is C de that is we call Customs good declaration short form is C de but retaining copies of tax invoices the original of the tax invoice shall be issued of the person to whom the supply was made and duplicate of such invo shall be retained by the person who makes such supply for a period of 5 years this is you again you need to remember all the vet related documents invoices you need to keep for the five years after the expiry of taxable period in which the such invoice was issued and with are you in position to issue copies of tax invoices no it's not possible it shall not be lawful issue more than one tax invoice for each Supply if a registered person claims to have lot of if he lost the original tax invoice then what he what he can do is the particular supplier can give another invoice especially mentioning it as copy only so you can't issue another tax invo that is what you need to remember okay we'll move to the next one right registration input claim uh input tax attributable to Services received shall not be deducted in respect of the following in supply of Motor Vehicles purchase price other than motorcycles bicycles motor coaches providing employe for the transportation of his employees basically here the motor vehicles you can see not for the public transportation motor vehicle used for Excursion tours or the transportation of touristes tourist tourist or the transportation of goods or hiring cars on a motor vehicle or forming part of any stock in trade of taxable activity so just you need to remember that as well when you are claiming input R then the supply of goods and services received is not connected with the taxable activity there can be some Services which are not connected with the main taxable activity that also you will not be able to deduct right we'll look at the next one if Supply goods or services received is not supported by a valid tax invoice remember when you are claim when you want to claim your input V you must have a valid tax invoice or else you must have the cost de another most important thing in even in your exam also this can be tested for local invoices that is valid only for 12 months 12 months but Focus date that can be claimed in your vet return 24 months basically 2 years so this is what you need to remember local invoices you can claim for a 12 months period that means within a year and the C di you can claim within 24 months that means 2 years right we'll move to the next one and see the calculation part filing of vet return every registered person is required to furnish the vet return uh Revenue Department last day of the month after expiry of each taxable period say for an example if you're going for a monthly basis April return you must file before 30th May so that's the low and if you're not complying up to 50,000 per return you need to pay and payment of tax uh again you need to remember now the payment due date for manufacturers is 20th of every month the following month say for an example April month you need to make that payment on 20th of next month and quartly taxable periods quartly because I told now there are two categories one is monthly basis and another one is quartly monthly one also once they finish the month next month 30th they have to make it returns and quartly also next month 30th for payments also monthly basis 20th and the quarter basis quarter and balance by the 20th of month immediately after the quarter but remember non manufacturers for during the last year there was a category where you need to make it for 15 days first 15 days you need to make by uh before 30th of next month then the LA last 15 days of a month following month before 15 that was the category earlier we had but now this also has been changed even manufacturers and un manufacturers everybody now they have to uh make it on the make the payments on 20th so that's the current um LW right we'll move to the next one this is a simple example for you to get some sort of idea how to do the calculation and but I urge you to go to the go through your study manual because study pack is having lot of examples uh out of that you can get good idea but this is only one sample example for you to get some sort of idea uh now now you can see vet registered person liable for vet 1.4 million supplies to Nonet registered person now there can be situation even if you have already registered for vet but the people who are getting your services are not registered for V for that people also you need to make the vet so that's what the particular example says another category called nonv registered person and at the same time you have input Imports of Lori uh purchase of Staff meals purchase of raw material uh purchase of raw material not supported with tax invoices electricity sta salaries and wages now we'll see how we have calculated this one right now as I told you on suppli is liable at the standard rate what I have done both supplies I have added and divide it by 115 because it's inclusive value so multiply by 15 I got 53,6 25 and paid at a standard rate I think all of you can remember the vehicles Lori it has been Exempted now you can see Exempted star males that is not allowed because that is not connected with the business I told you then raw material also again you need to uh get because this is inclusive value you need to divide by 115 and multiply by 15 and raw materials without tax invoices not allowed because you don't have the supporting documents electricity is that Exempted you can't do salaries and wages no wet so total you can see 67,500 once you deduct it balance payable is 463,000 right this is a small video of inue Department how to file V return practically just uh watch the video Welcome to this module in this module you will learn how to file that e e e e e right we'll move to the next part right you can see now we have discussed up to now Valu Tex how we calculated and all the calculations also we did now I'm going to discuss with you what is mean by spat scheme and what is Von financial services that is we call Von fs and tour is V refund scheme those are the three things now we need to discuss so again you need to understand what is mean by svat I just explain youat mean basically earlier can you remember I told one example with regard to section 227 condomonium property they are providing that service but during the construction period they are not not in position to claim the input value now with that earlier mechanism of inair Revenue Department was to refund those taxes if at the time of they are making payment and after that they are refunding and in order to simplify the vet system operation to minimize the transaction with regard to vet collection and refunding new system called s has been introduced with the from 1 April according to the new system there are two people so what are those who are those two people one is we call Rip that is we call registered identified purchasers and the other person is RIS registered identified supplier now uh just try to understand this concept I will explain You by taking a small example now just imagine I'm doing a construction project and I'm doing I'm registered under the section 227 now I am getting all the materials from another person he is becoming the RIS registered identified supplier I am registering as the rip registered identified purchaser so who can register as Rip these are the people who can register for RIP just look at it have a look exporters of article as well as Services zero rated suppliers if you are coming under the service zero rated supplies yes you can apply for the rip or else registered person engaged in any strategic project okay that is also covered person engaged in any specific project yes as I told you you can see any person uh persons registered section 227 also applicable no basically what you need to understand I'll take the same example again now if I'm registered for Section 227 I can apply for R category registered identified purchasers now who can be r sorry who can be RIS RIS basically can be the people who are providing that services to rip right we'll move to that before uh that there is a small question just look at this one what is the V rate in Sri Lanka with from 1 December 2019 right you didn't listen to me properly that's what I saw because I told 50 % is applicable only up to 30th November right now first December onwards the rate is 8% but you need to remember this rate has been changed from December onwards but the threshold has been changed from January 29 20 onwards but anyway 50 50 you are saying 8% and 50% but the correct answer is 8% right now we look at who is RIS RIS mean people who are providing that services to RP in my example I'm doing section 227 project now there is a person who is providing uh what do you call we'll say we'll take Construction Services I have Outsource it through one construction company so they become RIS I'm rip so whatever the amounts that I making to him will not make under this situation under the SP scheme what will happen RIS is issuing a invoice to RP that is we called suspended V you know simplified under the simplified V scheme suspended tax invoice that suspended tax invoice mean I'll tell you simple example just take the value as 100 rupees so r s is giving a 100 rupees invoice to rip now they will be putting 100 rupees is the supply 15 rupees as betet but they are putting the suspended bet then you are getting 115 rupees invoice to rip but but RP is paying only 100 rupees to RIS for balance 15 rupees they are giving a document called credit voucher this mechanism we call is very simple RIS is there rip is there R is providing some service to rip then they are sending not the tax invoice they are issuing only the suspended tax invoices once they issue that suspended tax invoices to rip rip will make payment only for the supply value not for the vet instead of that vet value rather than paying that amount they will issue a document called credit voucher to r s right this is what happened in Sp process now why they have introduced uh this is I have given the whole thing I have elaborated here uh what you need to understand the concept just uh in your book just have a sketch diagram that's more than enough for you to understand this one RIS is providing services to rip so they are putting invoices suspended B invoices to them so 100 rupees 115 they put to them but they are making only 100 rupees for 50 rupees they are giving the credit voucher so the the objective of this mechanism is to reduce the administrative burden to in department so they are not making refunds only the uh exchanging a document among both parties that's what happened in this system so these things you you need to understand right next one we are moving to the won Financial Services won financial services mean all the finance organizations basically uh you can see here who is liable all the people who are involving in finance business now you can go through your study path they have specifically mention all the banks finance institutes and everything is there but in addition to that if somebody is doing that Financial Services even if he has not registered as a company or a business organization they also fallen into this category so that on Financial Service the method of calculation of vet is totally different from the normal vet and uh the rate is very important here the rate is 15% in your exam purpose also 15% but even as I told the rates have been changed with from December but this B on Financial Services rate didn't change so that will continue as 15% um but anyway for your exam purpose the rate will be only the 15% the method of calculation is totally different but in your stage we are not touching how to calculate that one right then registration requirement similar to the other requirement similar to the normal vet registration Financial Service shall exceed 3 million per quarter and 12 million per anom and filing of that return similar to uh normal companies normal vet registered person before end of the following month of the taxable period so that's what you need to remember okay right we'll move to the most important another area that is we called tourist F fund scheme so what is mean by tourist V fund scheme this is a scheme where we can see in other countries if you go to the Singapore if you go to the Thailand they have system called VY fund scheme so this also introduced Sri Lanka very recently by understanding that we can capture many tourist to Sri Lanka if we introduce kind of a tourist b f scheme now in other countries how it operates if you go to a country like Singapore when you buy the goods at the time of you are make because you need to anyway make the payment for that but when you are coming to S Lanka at the time of departure then there is a counter where they are refunding your vount the same thing is happen in Sri Lanka uh you can see here uh tourist FY fund scheme actually introduced on 11 September 2018 and what happens and how it operates basically we have a video I will show you how it operates Le step by step but you need to remember there are only very few people eligible for this refund scheme noncitizen and non resident of Sri Lanka because Sri Lankans cannot get this benefits you must must be noncitizen and unident stayed in Sri Lanka for less than 90 days and under visit Visa visit a visit uh Visa issued by the control general of immigration and immigration and should not be less than 18 years of age as of the first day is visit Sri Lanka because even for children they can't get this benefit uh this is we called tbrs right so what are the conditions of this tbrs the t is required to have a minimum of 50,000 worth of vet liable purchases for this one if somebody is less than 50,000 Rupees you are not eligible under this stream and consisting of Maximum three commercial invoices issued by the same day and this is there in the video where you can see and tourist has to apply for the V fund using tbrs application form and goods should be taken out Sri Lanka either in baggage or hand baggage hand luggage right we'll look at the video to get the clear idea in Sri Lanka if you are 50,000 s l rupees in after making purchases at an authorized retailer who displays taxfree shopping logo you are entitled to claim prer when you leave Sri Lanka you are eligible for your if you fulfill the following criteria a noncitizen and nonresident of s Lanka stayed in Sri Lanka for less than 90 days and a visit Visa issued by The Controller General of immigration and immigration of Sri Lanka should not be less than 18 years of age as the date of you visit Sri Lanka let's look at what are the conditions of Tourism B number one you are required to have a minimum of 50,000 Sri Lankan rupees worth of fat Lael purchases that is exclusive of fat and that there are two criterias criteria number one consisting of Maximum three commercial invoices issued on the same day by the same retailer criteria number two need to obtain Factory fund invoice that is called TVR AR from the same authorized retailer by providing commercial invoices along with your passport number two you have to apply for your VY fund using a tvrs application form number three Goods should be taken out of Sri Lanka either as a baggage or hand bagage please note that the goods declared in the boices should be available for physical verification of the custom point Goods eligible to claim under tourist schem all Goods on which p is charge that is standard rated goods are eligible for a refund except number one Goods that are prohibited on aircraft for a safety reasons you can check with your airline for prohibited items number two goods that are prohibited and restricted under Sri Lanka Customs audience SE number three vet Exempted Goods that is where vet was not paid number four Goods that have been wh or partly consumed in Sri Lanka for example Foods beverages number five Services consumed for example Hotel charges number six Goods purchased online and taken out of Sri Lanka number seven Goods that are not presented for inspection with the required application form at the TVs counter where to claim refunds the tvrs counters are located at the bandara International Airport katuna Sri Lanka how to claim TBR you can make your claim for a tax refund by visiting a PVS counter at The Point of Departure let's summarize entire evv is into Three Steps step number one present the following documents to the DVRs Customs verification counter with Goods entitled to claim refund number one completed toist V fund claim application form number two original tourist V fund invoices that is dvri with specified commercial invoices number three valid passport step number two upon custom verification submit the board documents to tvrs inl avue counter for a refund claim step number three submit the payment voucher for processing to the bank of C loone Branch located inside the departure launch your refund will be paid in cash right the last question [Music] la [Music] n [Music] congratulations nrai I think you won the session then you can get the particular book I told you you can collect it from uh a center in Columbo even if you're very close to Candi you can collect it from Candy as well uh anyway congratulations but uh many of you have understood it incorrectly because I asked that return return for exporters it should be filed monthly basis the correct answer is that right anyway it's time for you to raise the questions you can use your Mobile uh to ask any question or else you you can ask the chat option also uh somebody has asked TVs and V related Financial companies specied in exam it's there in the syllabus tvrs and V veton Financial Services there's a possibility of asking some questions on that area any questions you can try from the both ways either you can come from the mobile or else you can use the chat option okay I hope more questions shall we move to the wind up session right I don't think no question from you right now it's time for you to rate rate our presentation how are you feeling today what is your idea this is very important for me for okay right thank you very much for your feedback I think U you have uh rank me as the good and excellent and okay also so that mean basically you understood the concept uh and hope you got good idea but again you need to remember just go through the study pack again and again that will be really helpful for you because most of the examples and everything is there okay thank you very much for your participation okay thank you thank you very much Mr VJ I think uh this session would definitely help our students to excel their knowledge in V so I would like to thank again Mr vaj for his tremendous service so our next webinar will be conducted tomorrow as usual you can pass this message to your friends to join the session tomorrow and uh until then I would like to request you to be at home and be safe and study well and prepare for the exam winding up the session