While the abolishment of
input tax credit was blamed for this, citizens stated that in the end, they were forced to bear the brunt of higher bills.
In absence of this clause, the customer is under no legal obligation to pay this portion of VAT, unless the customer is a tax-registered entity and can claim the VAT paid to insurers as
input tax.
In the absence of this clause, the customer is under no legal obligation to pay this portion of VAT, unless the customer is a tax-registered entity and can claim the VAT paid to insurers as
input tax.
A standard-rated supply is when the supplier charges VAT at 5pc, but is able to recover
input tax incurred in making this supply.
CII also stressed upon the need for designing a fool- proof and effective return filing system where seamless and speedier
input tax credit (ITC) can be availed by the recipient, as against the current requirement of filing three GST returns.
Only a taxable person registered for VAT may recover
input tax therefore registering with FTA is the starting point for
input tax recovery.
The selection is done by both the concerned Commissioner and Federal Board of Revenue (Audit selection is based on different risk parameters (viz-a-viz ITO, 2001, STA, 1990 and FEA, 2005) such as excess claim of P and L expenses, low profitability to assets ratio, consistently many years, high ratio of
input tax to output tax and carry forward of
input tax.
As the manufacturer has not incurred any
input tax on his purchases, he has a net VAT payable to the tax authority of 0.
Listing the benefits of getting registered under GST, the ministry said that
input tax credit can be passed on in the value chain and due taxes collected will come to the exchequer.
By introducing
Input Tax Credit, the end consumer will only bear the GST charged by the last dealer in the supply chain, with set- off benefits at all the earlier stages," Anurag Ranjan, a chartered accountant, told Mail Today.
Several changes have been made to the
input tax credit mechanism.
Register today for July sessions on FSA ID (July 11), Understanding Loan Repayment (July 19), and How to Manually
Input Tax Information (July 27).
