Cenvat credit in case of service under composition scheme

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hardesh tolani (Querist)
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11 January 2013 Under Composition Scheme can a Service Receiver who has taken services from Service Provider who has opted for Composition Scheme take credit of service tax paid to service Provider.

Kaushik Vinod

Kaushik Vinod (Expert)
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11 January 2013 Dear Hardesh,

Yes the Service Recipient can avail the credit of tax only to that extent.
For your reference I am giving the the extract of Rule 3(2A)of Works Contract ( Composition Scheme) Rules,2007
2a[(2A) The CENVAT credit of tax paid on taxable services as referred to under sub-clauses (zzd), (zzq) and (zzzh) of clause (105) of section 65 of the Finance Act, 1994, shall be available only to the extent of 40% of the service tax paid when such tax has been paid on the full value of the service after availing CENVAT credit on inputs.]

Thanks

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