Input tax credit under value-added tax system: Few unexplained issues
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Dhaka, Jan. 11 -- Value-added Tax (VAT) is the most widely used indirect tax system in the world. Under the system, input tax credit is admissible against output tax. This input credit system makes VAT system widely acceptable. Without input tax credit, there is a 'cascading' effect of taxes i.e. double taxation (VAT on VAT) occurs. Bangladesh follows a negative list approach in granting input tax credit. It means, input VAT credit will be given for all purchases/imports except items excluded from the definition of 'inputs'. Among others, input tax credit cannot be claimed for VAT paid on acquisitions related to the exempt or non-taxable supplies and on rental payments. In claiming input tax credit, the tax payer (claimant) will have to m...
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