Section 21: Credit for input tax against output tax

21. Credit for input tax against output tax (1) Subject to this section, a person may, if he is a taxable person, take, in his return referred to in section 22 or in his statement referred to in section 23, as a credit against his output tax in any taxable period, the amount of input tax allowable to him during that period. (2) No input tax shall be allowed as a credit under this section in respect of— (a) goods or services used to make an exempt supply; (b) motor cars and other motor vehicles for the transport of not more than 9 persons, including the driver, motorcycles and mopeds, for own use or consumption, and their spare parts and accessories; [Issue 10] V4 – 20 Revised Laws of Mauritius (c) accommodation or lodging, catering services, receptions, entertainment, and the rental or lease of motor cars and other vehicles specified in paragraph (b), for own use or consumption; (d) maintenance or repairs of motor cars and other vehicles specified in paragraph (b); (e) petroleum oils and other oils or preparations of heading No. 27.10 of Part I of the First Schedule to the Customs Tariff Act, except— (i) fuel oils; (ii) oils or preparations used for resale; and (iii) gas oils for use in stationary engines, boilers and burners; (f) petroleum gas of heading No 27.11 of Part I of the First Schedule to the Customs Tariff Act and used for the running of motor cars and other vehicles specified in paragraph (b); (g) goods and services used by banks holding a banking licence under the Banking Act for providing banking services other than to non-residents and corporations holding a Global Business Licence under the Financial Services Act; (ga) banking services provided by banks holding a banking licence under the Banking Act other than to non-residents and corporations holding a Global Business Licence under the Financial Services Act; and (h) goods and services used by persons for the purpose of providing services specified in item 4 of Part II of the Tenth Schedule, or services specified in item 4 of Part II of the Tenth Schedule. (2A) Subsection (2) (b) shall not apply to quad bikes, golf cars and similar vehicles. (3) (a) Where goods or services are used to make a taxable supply, the credit in respect of those goods or services shall be allowed in full. (b) Subject to paragraphs (c) and (d), where goods or services are used to make both taxable supplies and exempt supplies, the credit in respect of those goods or services shall be allowed in the proportion of the value of taxable supplies to total turnover on the basis of— (i) in the case of a new business, the estimated figures for the current accounting year; or (ii) in any other case, the actual figures for the previous accounting year. (c) The amount of input tax taken in accordance with paragraph (b) shall be adjusted by the person at the end of his accounting year, and an adjustment shall be made by him in his return for the taxable period immediately following the end of that accounting year. V4 – 21 [Issue 10] Value Added Tax Act (d) Where it is proved to the satisfaction of the Director-General that the apportionment in accordance with paragraph (b) is, having regard to the nature of the business, not fair and reasonable, the Director-General may approve such alternative basis of apportionment as he considers appropriate in the circumstances, subject to such conditions as may be prescribed. (4) The amount of any input tax or output tax shall be adjusted to take into account a debit 4 – 21 [Issue 10] Value Added Tax Act (d) Where it is proved to the satisfaction of the Director-General that the apportionment in accordance with paragraph (b) is, having regard to the nature of the business, not fair and reasonable, the Director-General may approve such alternative basis of apportionment as he considers appropriate in the circumstances, subject to such conditions as may be prescribed. (4) The amount of any input tax or output tax shall be adjusted to take into account a debit note or credit note or a bad debt which is proved to have become bad and to have been actually written off as a bad debt. (5) No credit for input tax shall be allowed unless— (a) VAT invoices issued by suppliers legally authorised to charge VAT; or (b) customs import declarations, either electronic or otherwise, in support of the credit, are made available to the Director-General for examination on demand. (6) Where credit for any input tax has not been taken in the taxable period in which it ought to have been taken, a registered person may take such credit within a period of 36 months of the date the input tax ought to have been taken. (7) (a) Where, in respect of a building or part of a building, including extension and renovation, forming part of the fixed assets of a registered person, a credit for input tax has been taken, and before the end of the nineteenth year following the year in which it was acquired— (i) that building or part of that building is sold or otherwise transferred; (ii) the person transfers his business or ceases to carry on business; or (iii) the Director-General is satisfied that the person should cease to be registered under the Act, the registered person shall, subject to subsection (7A), be liable to pay back to the Director-General, in respect of the remaining portion of that period, the proportionate amount of the credit allowed. (b) The registered person shall treat the proportionate amount referred to in paragraph (a) as output tax in his return for the taxable period in which— (i) the building or part of the building is sold or otherwise transferred; (ii) he transfers his business or ceases to carry on business; or (iii) his registration as a registered person is cancelled pursuant to paragraph (a) (iii), whichever is the earliest. [Issue 10] V4 – 22 Revised Laws of Mauritius (7A) (a) Where the building or part of a building referred to in subsection (7) (a) in respect of which a credit for input tax has been taken is sold or otherwise transferred to a registered person, before the end of the nineteenth year following the year in which it was acquired, the seller or transferor shall be deemed to have made a taxable supply and shall charge VAT on that supply in accordance with paragraph (b). (b) The VAT chargeable under paragraph (a) shall be the credit for input tax taken by the seller or transferor in his VAT return in respect of the building or part of the building, multiplied by the factor referred to in paragraph (c). (c) The factor shall be the proportion which the period between the date of sale or transfer and the expiry of the 20-year period from the date of acquisition bears to the 20-year period. (8) For the purpose of determining the proportion of the value of taxable supplies to total turnover under subsection (3) (b), the value of taxable supplies shall exclude the value of capital goods. (9) Notwithstanding subsection (5), but subject to subsection (10), where a person is registered for VAT under s (c) The factor shall be the proportion which the period between the date of sale or transfer and the expiry of the 20-year period from the date of acquisition bears to the 20-year period. (8) For the purpose of determining the proportion of the value of taxable supplies to total turnover under subsection (3) (b), the value of taxable supplies shall exclude the value of capital goods. (9) Notwithstanding subsection (5), but subject to subsection (10), where a person is registered for VAT under section 15, he may, subject to subsection (2), take credit in his first VAT return of the VAT paid or payable on his trading stocks and capital goods, being plant, machinery or equipment of a capital nature, held on the date immediately preceding the date of his registration. (10) No credit shall be allowed under subsection (9) unless— (a) the registered person submits to the Director-General at the time of submission of his first VAT return, an inventory duly certified by a qualified auditor, of— (i) his trading stocks; and (ii) his capital goods, being plant, machinery or equipment of a capital nature, on the date immediately preceding the date of his registration; (b) the goods forming part of his trading stocks and the capital goods were acquired within a period not exceeding 3 months immediately preceding the date of his registration; (c) the VAT paid or payable is substantiated by receipts or invoices issued by VAT registered persons or by customs import declarations; and (d) credit for input tax in respect of the goods has not been taken under section 23. (11) (a) Where, in respect of a taxable period, a registered person carries forward an excess amount of input tax over output tax and it is found that the excess has been overclaimed, the person shall be liable to pay to the Director- General a penalty representing 20 per cent of the amount overclaimed and such penalty shall be deemed to be output tax and shall be included by that person in his return in respect of the taxable period immediately following that taxable period. V4 – 23 [Issue 10] Value Added Tax Act (b) The penalty under paragraph (a) shall not exceed 100,000 rupees. (c) Paragraph (a) shall not apply where a penalty has been claimed under section 24 (9) in respect of the overclaimed excess. (12) In this section— “for own use or consumption” means— (a) for the purpose of subsection 2 (b), other than for resale or rental; (b) for the purpose of subsection (2) (c), uses or consumption by a person who is not in the business of supplying accommodation or lodging, catering services, receptions, entertainment, or the rental or lease of motor cars and other vehicles specified in subsection (2) (b), as the case may be. [S. 21 amended by Act 18 of 1999; s. 22 (b) of Act 23 of 2001 w.e.f. 11 August 2001; s. 31 (j) of Act 20 of 2002 w.e.f. 10 January 2003; s. 19 (e) of Act 18 of 2003 w.e.f. 1 October 2003; s. 20 (a) of Act 28 of 2004 w.e.f. 1 October 2004; s. 33 (c) of Act 14 of 2005 w.e.f. 1 July 2005; s. 31 (b) of Act 17 of 2007 w.e.f. 22 August 2007; s. 38 (d) of Act 18 of 2008 w.e.f. 1 July 2009 in respect of input tax taken in taxable period commencing 1 July 2008 and onwards; s. 47 (a) of Act 14 of 2009 w.e.f. 30 July 2009; s. 19 (c) of Act 37 of 2011 w.e.f. 15 December 2011; s. 29 (g) of Act 26 of 2012 w.e.f. 22 December 2012; s. 30 (d) of Act 26 of 2013 w.e.f. 21 December 2013; s. 53 (d) of Act 9 of 2015 w.e.f. 14 May 2015; s. 58 (d) of Act 18 of 2016 w.e.f. 1 October 2016; s. 5 y 2005; s. 31 (b) of Act 17 of 2007 w.e.f. 22 August 2007; s. 38 (d) of Act 18 of 2008 w.e.f. 1 July 2009 in respect of input tax taken in taxable period commencing 1 July 2008 and onwards; s. 47 (a) of Act 14 of 2009 w.e.f. 30 July 2009; s. 19 (c) of Act 37 of 2011 w.e.f. 15 December 2011; s. 29 (g) of Act 26 of 2012 w.e.f. 22 December 2012; s. 30 (d) of Act 26 of 2013 w.e.f. 21 December 2013; s. 53 (d) of Act 9 of 2015 w.e.f. 14 May 2015; s. 58 (d) of Act 18 of 2016 w.e.f. 1 October 2016; s. 57 (b) of Act 10 of 2017 w.e.f. 24 July 2017; s. 69 (e) of Act 11 of 2018 w.e.f. 9 August 2018.]