WHAT IS INPUT TAX CREDIT (ITC)?

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ITC is one of the most important areas of focus in GST. It is where business can claim back whatever incurred in the futherance of its business. ITC is an allowable deduction that can be used to offset against GST. This means that only the net of GST (GST from sales earned less ITC from costs incurred) need to be paid to the government for THAT particular reporting period.

SOURCE:100++QUICK ANSWERS GST FOR BUSY BUSINESS PEOPLE / SECTION C

WILL GST AFFECT A COMPANY CASH FLOW ADVERSELY?

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Generally yes because :-

A.Company needs to pay GST upfront without the full possibility to claim back at later date because some input tax credit are not allowed to be recovered.

B.In the case where your customer has not paid you, you are required to still pay the GST to the Customs upon tax filing based on the tax invopice issed.

Certain businesses may likely to enjoy some cash flow advantage such as:-

> Retail-based businesses or cash based businesses where money is collection upfront including GST and given if their turnover p.a. is below RM 5M, the only submit their returns on a quartely basis, hence have 3 month to hold on to GST cash collected upfront.

SOURCE:100++QUICK ANSWERS GST FOR BUSY BUSINESS PEOPLE /SECTION C

HOW DOES THE GST REFUND SCHEME WORKS?

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If in any particular reporting period where your Input Tax Credit (ITC) exceeds the GST , your filing of return will result in a tax credit that Customs are supposed to refund to you according to a designated schedule committed by the Royal Customs.

SOURCE:100++QUICK ANSWERS GST FOR BUSY BUSINESS PEOPLE / SECTION C