ISD and Input Credit of Service Tax

This query is : Resolved

Ravi Kiran (Querist)
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11 June 2008 Dear Sir,

Our Company is in Manufacturing of Dies and Punches and as well as do Trading of Machinery and we get commission for the same in Forex and also we get service income on AMC of Machinery in india Our Books of Accounts are maintained Division wise I.E. Manufacturing Div and Trading Div My query is

1) Commission which we receive is totally 100% in forex and we dont levy service tax on commission income but we levy service tax on AMC for the Machinery and total earnings which we receive is in indian rupees so can we get input service credit against the output service tax also if the input service tax is more than the output service tax can we take input service distribution credit and raise bill on our manufacturing division

2) How much percentage of Input credit can we avail against out put service if we provide both export and non export service

Regards

Ravi Konda

CA Anand Sarda

CA Anand Sarda (Expert)
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20 June 2008 There are 3 options available.

1) Maintain separate accounts for taxable services, excisable goods, exempted services and expemted goods, in respect of inputs, capital goods, and input services.

2) Dont maintain separate account
take input credit on all inputs, capital goods, and input services, and pay tax @10% for expemted goods and 8% for exempted services, and for taxable services and excisable goods anyhow u will collect and pay.

3) Proportionate method.
In this option dont take the credit on inputs,capital goods and input services, attributable to exempted services and exempted goods.