Section 31

Refund of tax on bad debts 

(1) Where a registered person has made a supply and has accounted for and paid tax on that supply but has not received any payment from the person liable to pay the tax, he may, after a period of three years from the date of that supply or where that person has become legally insolvent, apply to the Commissioner for a refund of the tax involved and subject to the regulations, the Commissioner may refund the tax: 

• Provided that no application for a refund shall be made under this section after the expiry of five four years from the date of the supply. (TaxLAA-No1-2020 wef-25April2020)   Deleted by  (Finance Act 2023 wef 1st-July-2023 s34)

(1)*Where a registered person has made a supply and has accounted for and paid tax on that supply but has not received any payment from the person liable to pay the tax on that supply and that person− 

• (a)has not received any payment from the person liable to pay the tax, he may, after a period of three years from the date of the supply; or 
• (b)the person to whom the supply was made has been placed under statutory management through the appointment of an administrator, receiver, or liquidator, 

he may apply to the Commissioner for refund of the tax involved: Provided that- 

(a)no application for a refund shall be made under this section after the expiry of ten years from the date of supply; 

(b)the refund shall be made in compliance with section 47(5) of the Tax Procedures Act; 

(c)the amounts may be credited to the taxpayer’s record for use against future value added tax liabilities; 

(d)where the tax refunded under sub-section (1) and (2) is subsequently recovered from the recipient of the supply, the registered person shall refund the tax to the Commissioner with sixty days of the date of recovery; 

(e)if the payment is made within the time specified under subsection (1) and (2), an interest of two per cent per month or part thereof of the tax refunded shall forthwith be due and payable and the interest shall not exceed one hundred per cent of the refunded amount.  (Finance Act 2023 wef 1st-July-2023 s34*)

(2) Where the tax refunded under subsection (1) is subsequently recovered from the recipient of the supply, the registered person shall refund the tax to the Commissioner within thirty days of the date of the recovery.

(3) If payment is not made within the time specified under subsection (2), an interest of two per cent per month or part thereof of the tax refunded shall forthwith be due and payable: 

• Provided that the interest payable shall not exceed one hundred per cent of the refunded amount.

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