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CMA Final · Indirect Tax Laws and Practice · Input Tax Credit

Which statement about the ISD's ineligible credit is correct under the distribution rule?

The ISD must distribute ineligible credit and eligible credit separately, each according to the attribution and turnover-based rules. They are not combined into a single amount, and ineligible credit is not simply written off or restricted to recipients making exempt supplies.

  1. AIneligible credit is distributed together with eligible credit as a single amount
  2. BThe ISD separately distributes the ineligible credit and the eligible creditCorrect
  3. CIneligible credit is never distributed and is simply written off by the ISD
  4. DIneligible credit is distributed only to recipients making exempt supplies

Explanation

Clause (g) requires the ISD to separately distribute the amount of ineligible credit (for example under the section 17(5) blocked credits) and the amount of eligible credit, in line with clauses (d) and (e). It is not merged into one figure.

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