Cenvat Credit on Works Contract

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 January 2011 Dear Member,

Pls explain whether the cenvat credit of input service is available in case of composition scheme of service tax @4.12% in works contract.

As i know we cannot avail the cenvat credit of input and input services in composition scheme.

Pls confirm the same and provide the related provision.

Thanks

Ram Avtar Singh

Ram Avtar Singh (Expert)
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30 January 2011 The Central Government has introduced the compounded rate of tax on works contracts by proving that the contractor can opt to pay a 3.43% or 1/3 of 10.3% service tax on the gross value of the contract. The gross value of the contract shall not include VAT / ST paid on the contract. The contractor opting for the composition scheme shall not be entitled to CENVAT credit of duties or cess paid on any inputs in relation to that contract.

Please refer Notification No 32/2007 dated 22 May 2007.

now service tax rate10.3% 1/3=3.43%

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