Mixed Supply (A x B/C)

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<strong>Mixed Supply : Taxable Supply and Non-Taxable Supply</strong>

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In case of goods or services purchased which are partly used for taxable supplies and partly for non-taxable supplies, tax credit shall be allowed only on the part that is used for taxable supplies.

Input tax that cannot be attributed to taxable and non-taxable supplies the input tax credit shall be calculated according to formula: A x B/C.

A: the total amount of input tax for the period;

B: the total value of taxable supplies exclusive of VAT made by the taxable person during the period; and

C: the total value of taxable and non-taxable supplies exclusive of VAT made by the taxable person during the period, other than the value of a non-taxable supply of the transfer of a business.

There are three cases for fraction B/C as follows.

1.Where the fraction B/C is less than 0.05, the taxable person shall not be allowed any input tax credit for the tax period.

2.Where the fraction B/C  is from 0.05 to 0.95, the taxable person shall be allowed tax credit according to the proportion of the formula A x B/C.

3.Where the fraction B/C  is more than 0.95, the taxable person shall be allowed tax credit for all input tax for the tax period.

The Tax Department may allow the taxable person to use an alternative method for calculating deductible input tax credit:

a) Separate input tax for taxable and non-taxable supplies in so far as this is possible. In this case the taxable person may claim all the input tax related to taxable supplies, and none for input tax related to non-taxable supplies.

b) For the remaining input tax that cannot be attributed to taxable and non-taxable supplies the tax credit shall be calculated according to the provisions (formula) above.
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