It will do this by accounting for the VAT due to it on VAT return (as a form of output tax
) and simultaneously recover the input VAT on the same return.
He noted that Expo 2020 is going to result in good numbers, but both input and output tax
comes into play for VAT collection.
The businesses can avail the facility to deduct input tax (tax paid on purchases) from the output tax
(tax collected on sales) and only remit the balance tax payable to the National bureau for Revenue.
However, the zero-rating provisions will obviously limit the total output tax
The amendment, which comes into effect from February 1, 2019, will see the IGST (Integrated GST) credit to be first utilised and only when such credit is exhausted will credit of CGST and SGST (State GST), if any, be utilised against output tax
A key principle of a VAT system is the ability for a business to offset the VAT incurred on purchases (input tax) against the VAT charged on sales (output tax
Input VAT deduction is a mechanism by which a VAT registered person can deduct input tax from the output tax
for a period and only remit the balance tax payable to the Government.
that leads to completely imbalanced and massive accumulation of refund claims which stand at around Rs.2 billion for Al Ghazi alone.
Consequently, in one unit, the amount of input tax is always higher than the output tax
. The outcome is an anomaly on a perpetual basis and refunds are increasing on a regular basis.
The council pointed out that it had come to know that the government was considering revising the output tax
to impose a flat 2% sales tax on all fertiliser products and withdraw the urea subsidy.
As for the requirements for tax returns, the Authority confirmed that the submission is made electronically and must include the value of standard-rated supplies made in the tax period and the output tax
charged; the value of zero-rated supplies made in the tax period; the value of exempt supplies made in the tax period; the value of any reverse-charged supplies received in the tax period; the value of expenses incurred in the tax period (if the business in question is looking to recover input tax and the amount of recoverable tax); the total amount of tax due and recoverable input tax for the tax period; and finally, the payable tax (or repayable) for the tax period.