input credit

This query is : Resolved

suparna k s (Querist)
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23 December 2009 Dear All,

Kindly throw some light on the below issue.

A P.ltd has approached B advertising P. ltd for advertisement. B advertising P. Ltd has approached TV channel for advertising on behalf of A P. Ltd.

The TV channel raised bill for Rs. 100+ Service tax 10 (approx.) to B advertising P. Ltd.

B advertising P. Ltd added its profit margin and raised a bill for Rs. 120 + Service tax 12 (excluding education cess) to A P. Ltd.

How much input credit can A P. Ltd claim?

Can A P. Ltd claim Rs. 10 input credit?

Please reply ASAP.

ANIL JANGID

ANIL JANGID (Expert)
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23 December 2009 Rs. 12

SANJAY JAIN

SANJAY JAIN (Expert)
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23 December 2009 Assuming that A Ltd has entered with B Ltd into composite contract of preparation and arranging display the advertisement.

Here the service provided by TV channel is covered under the SALE OF SPACE OR TIME FOR ADVERTISEMENT, and accordingly liable to pay service tax (Rs.10/-) on Rs. 100/- recovered from B Ltd.

Since B Ltd is liable to service tax for ADVERTISEMENT AGENCY SERVICE. As the B Ltd has used TV Channel services for providing advertisement service to A Ltd. In turn B Ltd shall be entitled to take credit of Rs. 10/- as input service.

Now B Ltd is billing for Rs. 120/- and charging service tax for Rs. 12/- to A Ltd.

Accordingly A Ltd shall be entitled for credit for Rs. 12/-.

For further query, feel free to write sanjayinfbd@yahoo.com (M-09350048731) or visit, HNO. 2489/8,Faridabad(Haryana)

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