Claiming Input tax rebate in case of transportation service was not valid until 2020.In Finance Act 2020, Provision for input tax claim was revised to the new law. In this scenario, cost against transportation service can be claimed as rebate on 80% of input value (Ref. Section 46(2)(d) of VAT & SD Act 2012). Transportation services are defined in Section 5 of 2nd part of the first schedule. Transportation services include:

1. Air conditioned bus service.

2. Air conditioned launch service.

3. Air conditioned Railway service.

4. Vehicle rental service.

5. Shipping agent.

6. Freight forwarder.

7. Transport contractor
8.Courier service.

9. Chartered Helicopter service.

10. Chartered plane service.

11. Ambulance service (Except Patient and Dead Body Carrier Ambulance service).

These services are defined in SRO No-186/law/2019/43-MUSHAK, Dated: 13th June 2019.

So, if this transportation costs are incurred as input, Person can claim 80% of input value as input tax.

Example:

Particular

Value

VAT

Claim on VAT return

Total Sale

100,000

15,000

15,000

Input:

 

 

 

Machineries

30,000

4,500

-4,500

Transport Cost (Rebate 80%)

20,000

3,000

-2,400

Increasing Adjustments (Transportation Cost 100%)

20,000

3,000

3,000

Decreasing Adjustments

 

 

 

 

 

Net VAT Payable

15,600