Service Tax Credit from 1-4-2011

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 May 2011 Sir,
As per the notification dated 31-3-2011, can you please clarify if service tax credit is to be taken on basis of payment or receipt of bill? Can you please give an illustration?

MAHENDRA KUMAR BAGRECHA

MAHENDRA KUMAR BAGRECHA (Expert)
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04 May 2011 Dear sir,

Department has given an option to pay service tax on accrual basis till 30.06.2011 and afterwards on cash basis. If you have raised the bill but not received the payment, you will have to pay service tax on due dates and there is no provision for taking deduction of bad debts under cash system.

Querist : Anonymous

Querist : Anonymous (Querist)

04 May 2011 Thanks for the Information... I was actually looking out for the basis on which service tax credit is to be taken. For Example: I have received a bill from a telecom company dated 24-4-2011 & pay it on 3-5-2011. My Querry here is that should I take the service tax credit while making payment of Service Tax for April or May?

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MAHENDRA KUMAR BAGRECHA

MAHENDRA KUMAR BAGRECHA (Expert)
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04 May 2011 Hi,

You can take service tax credit after making of actual payment only. If you pay it on 3.5.11, you can take credit from the tax liability of may 11.

MAHENDRA KUMAR BAGRECHA

MAHENDRA KUMAR BAGRECHA (Expert)
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06 May 2011 Hi,
I want to correct my earlier views on input credit.Cenvat credit on input services may be availed on/after the day on which bill/invoice/challan received from input service provider.but if the payment against the service not made within 3 months from the date of invoice/bill/challans, cenvat credit have to reverse with interest. However, after making payment, again we can avail the input credit.
As a transition provision, cenvat credit on invoices issued before 1.4.11,shall be allowed, on or after the day on which actual payment made to service provider