Input credit

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 July 2012 I am dealing in e-commerce business. I have paid service tax on rent for my office premise. Can this be considered as Input Service for providing my output services and can utilize the same against payment of tax on my output services ?

RENGARAJ R.K

RENGARAJ R.K (Expert)
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21 July 2012 Definitely,the rent you pay is for establishment purpose and without a premise you cannot do e-commerce business. So, in my opinion, it will fall under eligible input services.

Querist : Anonymous

Querist : Anonymous (Querist)

21 July 2012 Thank you sir.

However as per the new definition of Input service, it includes "service used in relation to (setting up - as omitted after 01-04-2011) modernization, renovation, or repairs of a factory, premises of provider of output service........".

Will this make any impact on eligibility of payment of service tax on rent as cenvat credit?

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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01 August 2024 In the context of GST and earlier, Service Tax, whether or not you can claim credit on service tax paid for rent as input credit depends on the rules and definitions laid out by the respective laws. Here's how it works:

### Under the Service Tax Regime

1. **Input Service Definition (Pre-GST):**
- Under the Service Tax regime, the definition of "Input Service" included services used in relation to the setting up, modernization, renovation, or repairs of a factory, or premises of the provider of output service.
- The service tax paid on rent for office premises generally qualifies as an input service since it is used to provide the output services of the business.

2. **Eligibility for Credit:**
- As per the definition before the amendment, service tax paid on rent for office premises could be claimed as CENVAT credit because it is considered a service used in relation to the provision of output services.
- Even after the amendment, where "setting up" was omitted, rent for office premises is still an eligible input service since it is related to the premises used for providing output services.

3. **Impact of Changes:**
- The removal of "setting up" from the definition does not impact the eligibility of claiming credit on rent for office premises. The core requirement is that the service must be used in relation to the provision of output services.

### Under the GST Regime

1. **Input Service Definition (GST):**
- Under GST, the definition of "Input Service" is broader. It includes any service used in the course or furtherance of business.
- The definition explicitly covers services related to the business operations, including rent for office premises.

2. **Eligibility for ITC:**
- Rent paid for office premises is eligible for Input Tax Credit (ITC) under GST as long as the premises are used for business purposes. There is no restriction on claiming ITC on rent for office premises under GST.

3. **How to Claim ITC:**
- Ensure that you have a proper invoice from the service provider.
- The rent payments should be recorded properly in your books of accounts.
- Claim ITC in your GST returns by reporting the eligible input services.

### Summary

- **Service Tax Regime:** You could generally claim CENVAT credit on rent for office premises as it was considered an input service used in relation to the provision of output services.
- **GST Regime:** Rent for office premises is an eligible input service under GST, and you can claim ITC for the same without restrictions related to the omission of "setting up."

Ensure compliance with the latest provisions of the tax laws and maintain proper documentation to support your credit claims.