Finance Bill 2026: Clawback of Input VAT on Unsold Stock Becoming Exempt from Tax

The Finance Bill, 2026 proposes a new section 17(A) to the VAT Act regarding unsold taxable supplies that become exempt.
Taxpayers must account for input tax previously claimed on unsold stock when its status changes from taxable to exempt.
The adjustment will use the same method as the original input tax deduction, and any excess must be paid to the commissioner.
The amendment aims to prevent revenue leakage by clawing back input tax benefits on goods that become exempt.
Effective date for this provision is 01 July 2026.

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.