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Cenvat credit - Works Contract composition

Sadanand (ca) (50 Points)

21 February 2011

Dear Members,

A Ltd is engaged in turnkey contracts and is registered under Works Contract Composition Schme of Service tax and paying 4.12% of Service tax.

A Ltd gets majority of its work done from sub-contractors who are also registered under Works Contract Composition Scheme.

Now the query is :

- Can A Ltd take the cenvat credit of the service tax ( 4.12%) paid on the bills of subcontractors ( who are registered under Composition Scheme) ?

Appreciate if members could share their views or experience.

Thanks and Regards,

Vishwanath

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5 Replies

Pankaj Arora (Learner) (3134 Points)
Replied 21 February 2011

Yes cenvat credit can taken. Input credit used for providing output service is eligible for cenvat credit.

1 Like

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Nirav Worah (CHARTERED ACCOUNTANT) (396 Points)
Replied 21 February 2011

Under composition scheme under works contract service cenvat credit can be taken against input services and capital goods and not against inputs. Hence, cenvat credit can be taken on service tax ( 4.12%) paid on the bills of subcontractor.

1 Like

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 22 February 2011

Input service and capital goods are eligible for cenvat. Under given case, cenvat credit of sub-contractor service can be taken.

1 Like

CA Arindam Dey (Chartered Accountant) (117 Points)
Replied 22 February 2011

Cenvat Credit on Input material on which VAT has been paid and material used in W.C. cannot be availed. However Cenvat Credit in respect of Capital Goods and Input Services(even if they are provided by a sub-contractor registered under Works Contract Composition Scheme) can be availed.