NBR defines production input to check VAT rebate claim

The National Board of Revenue has excluded a number of goods and services under six categories from the definition of input required for production of goods to avoid complexities in giving VAT rebate to businesses, mainly manufacturers.

Value-added tax wing of the revenue board on Saturday issued a general order containing the names of goods and services that would not be considered for giving VAT rebate.

The board issued the order as traders were claiming higher amounts of refund against some unusual inputs, commonly known as raw materials or components for producing finished goods, in absence of definition of inputs required for production of goods in the law.

According to the order, the goods and services that would not be included in the list of inputs include land, building, office equipment and fixture, machinery, construction, retrofitting, modernisation, replacement, expansion, remediation and maintenance of infrastructure, building and plant, furniture, office supply, stationary items, refrigerator, freezer, air conditioner, fan, lighting equipment and generator purchase and maintenance.

Interior design, architectural plan and drawing, renting vehicle and lease, travelling, refreshment, workers’ welfare, development works and related goods and services, rent of premises of business entity, office and showroom have also been excluded from the list of inputs eligible for VAT rebate.

The order, however, said the goods procured by a trader for sales, exchange or transfer would be considered as inputs.

Officials of the revenue board said that the VAT law allowed manufacturers to get refunds or adjust the VAT they paid while procuring or sourcing inputs to produce finished goods.

But field-level VAT offices were facing difficulties in determining the inputs eligible for refund as the new VAT and Supplementary Duty Act-2012 did not give any definition of inputs.

A section of businesses were also claiming some unusual items as raw materials and components as inputs to get refund, they said.

For example, a multinational cement company claimed refunds on unusual items claiming them inputs which included hotel and restaurant, printing stationary and office supply, furniture, event management, building construction or architect, interior, engineering firm and graphic design, they added.

They said these items were also not included in the list of eligible inputs in the previous VAT act of 1991.

They also said though the components like plant, building, property, machinery equipment, vehicles and furniture were necessary for production of goods, these were capital goods, not direct raw materials.

context : The new Age > http://www.newagebd.net/article/89005/nbr-defines-production-input-to-check-vat-rebate-claim

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