Section17: Tax Deduction

1) A registered person may deduct the amount of tax which he/she has collected against the tax he/she has paid or is due in importing or receiving goods or services related to his/her own taxable transactions.

2) Notwithstanding anything contained in sub-section (1), it may be provided that no deduction or only a partial deduction may be allowed in the case of the prescribed goods that can be used for commercial or personal purposes.

3) If the entire portion of goods or services transacted in a month was not used for taxable transactions, the tax previously paid on the goods or services shall be deducted as prescribed for the portion that was solely used for taxable transactions of the goods or services.

4) If goods or services, for which deduction facilities pursuant to this Section have been allowed, cease to be used for taxable transactions, such goods or services shall be treated as sold at the immediate market value and tax shall be recovered as prescribed.

5) Notwithstanding anything contained in Sub-section (1), deduction facility to be given for a registered person who deals with the used goods shall be as prescribed.

5a) The concerned taxpayer shall be allowed to deduct tax paid on the capital goods such as machinery imported or purchased in the name of any bank or financial institution on hire-purchase loan or mortgage as if such goods were imported or purchased by the concerned industry, company etc.

5b) The concerned taxpayer shall be allowed to deduct the tax paid pursuant to sub-section (2) of Section 8, Section 12A, and sub-section (3) of Section 15.

6) The deduction facility under this Act shall be given only when a claim is substantiated by documents as prescribed.

7) The provision of deduction on paid or payable tax for the goods to be used in the tax payable transaction remaining at the time of registration shall be as prescribed.

8) Notwithstanding anything contained elsewhere in this Section, the name of the taxpayer who fails to submit the tax returns for six consecutive months shall be published, and such taxpayer’s remaining amount of tax to be deducted, if any, shall be withheld and his or her registration may also be suspended.