Please help/ clarify on the following (for a Service Provider-Man Power Recruitment):
Advance Payment made (for input service) on: 18 May 12. Input Service to be effective from 08 July 12 upto 07 July 13 for one year.
My question is:
The Cenvat credit to be taken during the quarter April- June 12 (quater in which the payment was made) or during the quarter July- September 12 (when the input service is going to be actually effective).
02 June 2012
Point of taxation under service tax is now on accrual basis. This means you become entitled to service tax credit on accounting of invoice. However the payment of the same is to be made within 3 months. In your case you have made an advance for the services to be provided from 8th July. You may take the credit by creating an advance service tax account.Further you will need to take credit on quarterly bais on prorata basis from july onwards [first credit in Sept], as the service gets consumed during the year.You can also take prorata credit on Monthly basis, if the amount is sustantial. This means you cannot adjust this credit for your May and June liability which is payable in June and July.
CAclubindia
