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7. Determination of tax liability.―
(1)
For the purpose of determining his tax liability in respect of taxable
supplies made during a tax period, a registered person shall, subject to the
provisions of section 73, be entitled to deduct input tax paid during the tax
period for the purpose of taxable supplies made, or to be made, by him from the
output tax excluding the amount of further tax, that is due from him in respect
of that tax period and to make such other adjustments as are specified in
Section 9:
Provided that the taxpayer may adjust input
tax paid on the purchases in the immediate three preceding tax periods from the
output tax subject to the condition that the taxpayer specifies the reasons for
such delayed input tax adjustment in the revised sales tax return for such
period or in the return for the immediately succeeding tax period.
(2)
A registered person shall not be entitled to deduct input tax from output
tax unless,--
(i)
in case of a claim for input tax in respect of a
taxable supply made (***), he holds a tax invoice in his name and bearing his
registration number in respect of such supply for which a return is furnished;
(ii)
in case of goods imported into Pakistan, he holds bill of
entry or goods declaration in his name and showing his sales tax registration
number, duly cleared by the customs under section 79 or section 104 of the
Customs Act, 1969 (IV of 1969);
(iii)
in case of goods purchased in auction, he holds a treasury
challan showing payment of sales tax;
(3)
Notwithstanding anything in sub-sections (1) and (2), the Federal
Government may, by a special order, subject to such conditions, limitations or
restrictions as may be specified therein allow a registered person to deduct
input tax paid by him from the output tax determined or to be determined as due
from him under this Act.
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