The National Board of Revenue (NBR) has exempted the service sector from giving declaration their procurement to claim VAT rebate.
The VAT policy wing of the board issued a clarification on Thursday following widespread confusion about it.
With this latest order, there will be no complexities over the service sector to claim a rebate of the VAT without submission of the input-output coefficient.
The input-output coefficient is a declaration that the businesses have to provide the VAT authorities on how much raw materials needed for production.
As per the VAT and Supplementary Duty law-2012, all of the registered businesses have to submit the declaration to the divisional VAT official. As per the law, the businesses are not allowed to claim VAT rebates on raw materials without submitting the coefficient.
The service sector, including hotels and restaurants, claim VAT rebate on the procurement of products that are needed to provide services.
Officials said the service providers, especially hotels, are facing difficulties in claiming VAT rebate due to ambiguity between the Statutory Regulatory Order (SRO) and VAT law.
Earlier, the director general of the BCS Customs, Excise and VAT Training Academy AKM Mahbubur Rahman, in a letter, sought the NBR's attention to the ambiguity.
In a letter, he said, the field-level tax offices are confused over the provision in the VAT law where all VAT registered businesses will have to submit the input-output coefficient.
However, there are differences between the VAT 4.3 form and the law as the term 'service providers' has been deleted in that declaration form to give a waiver.
Some officials at the field level VAT offices are not allowing the service providers to claim rebate without the declaration of their procurement, officials said.
A senior NBR official said the confusion will go away with the clarification issued by the VAT policy wing, signed by first secretary Kazi Farid Uddin.
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