3A Accounting System

Thursday, February 5, 2015

What is Input Tax?

According to custom definition, input tax is the GST incurred on any purchase or acquisition of goods and services by a taxable person for the purpose of making a taxable supply in the course or furtherance of business.


  • Understand the input tax allowed to claimed and whether you are entitled to claim the input tax
  • Can set off against collected tax
  • Input tax is allowed to be claim within 6 years from the date input tax is incurred
  • Not all input tax are claimable, refer to Blocked Input Tax topic

Input Tax allowed to claimed
Quoted from General Guide, section 190, the following are Input Tax allowed to claimed:-
(a) a taxable supply (standard rated supply or zero rated supply);
(b) a disregarded supply such as supplies between group members registered under group registration;
(c) an incidental exempt supply such as an inter-company loan and loan to staff;
(d) a supply given relief; or
(e) supplies made outside Malaysia which would be taxable supplies if
made in Malaysia.

Criteria for Claiming Input Tax
Quoted from General Guide, section 191, Input tax incurred can be deducted from the output tax under the following conditions:-
(a) The claimant is a taxable person;
(b) The goods or services are acquired for the purpose of business;
(c) The goods or services are acquired for the purpose of making taxable supply;
(d) The claimant must hold a valid tax invoice in respect of a supply or a valid customs importation document Customs No. 1 in respect of importation of goods;
(e) A full tax invoice must be issued under the name of the claimant. A tax invoice issued under the name of employees will not be eligible for input tax credit; and
(f) The goods or services are not subject to input tax restriction such as passenger motor vehicle, family benefits and club subscriptions.

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