Tax Deduction for GST Payments

Are blocked input taxes allowable for tax deduction?  What about a GST registered person who forgoes his rights to claim input tax credit? These are the two common questions asked.

Finance Bill 2015 seeks to amend section 39 of the Income Tax Act, 1967 by stating:

• that any amount paid or to be paid in respect of goods and services tax by a person is not allowed as a deduction if he is liable to be registered under the Goods and Services Tax Act 2014 and has failed to do so, or if he is entitled under that Act to credit that amount of tax as input tax, and 
• that any amount of output tax paid or to be paid under the Goods and Services Tax Act 2014 which is borne by a person who is registered or liable to be registered under the GST Act is not allowed as deduction under the Income Tax Act.

These amendments have effect for the year of assessment 2015 and subsequent years of assessment.

Understanding GST Tax Codes - Part 3

Part 3: Purchase of goods under special schemes and blocked input tax

IS

Use this this tax code only if you have been granted approval under Approved Trader Scheme (ATS) and Approved Toll Manufacturer Scheme (ATMS). Under these schemes, GST will suspended when the approved trader imports goods into Malaysia. These two schemes are designed to ease the cash flow of traders who have significant imports.

Input Tax Credit and Blocked Input Tax

What is "input tax"? “Input tax” means GST on any taxable supply of goods or services to a taxable person including GST paid or to be paid by a taxable person on any importation of goods. The goods or services are used or are to be used for the purposes of any business carried on or to be carried on by the taxable person.