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Cenvat credit

navinkumar naicker (Article) (419 Points)

22 February 2013

Hello CACLUBINDIA,

pls let me know whether we can utilize the Input credit against payment of service tax liability where tax is to be paid under Reverse Charge Mechanism.

Thanks in advance.

Navin.

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7 Replies

CA CS SUMIT GUDDEWAL (Employed) (297 Points)
Replied 22 February 2013

if u r service provide in reverese charge mechanism scheme then u can utilize credit but if u r service receiver then u cannot utilize the credit

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navinkumar naicker (Article) (419 Points)
Replied 22 February 2013

@ CA SUMMIT GUDDEWALJI CAN U PLS EXPLAIN,

how to calculate liability under RCM for car hire chares paid.

thanks for ur reply.

Best Reards

Navin.

CA CS SUMIT GUDDEWAL (Employed) (297 Points)
Replied 22 February 2013

The service recipient would need to discharge liability only on the payments made by him. Thus the assessable value would be calculated on such payments done (Free of Cost material supplied and out of pocket expenses reimbursed or incurred on behalf of the service provider need to be included in the assessable value in terms of Valuation Rules). The invoice raised by the service provider would normally indicate the abatement taken or method of valuation used for arriving at the taxable value. However since the liability of the service provider and service recipient are different and independent of each other, the service recipient can independently avail or forgo an abatement or choose a valuation option depending upon the ease, data available and economics.

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