Cenvat - reverse charge

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Shivani

Learner

1881 Points Joined December 2012

Dear Friends

Full Reverse Charge

In case of full reverse charge, liability of service tax is on service receiver. Service receiver deposits service tax.

But who is entitled to take cenvat credit of service tax in full reverse charge.

Partial Reverse Charge

In case of partial reverse charge, liability of service tax is both on service provider (say 40%) and service receiver (say 60%). Service receiver deposits his share of service tax (60%). Service receiver pays to service provider service tax (40%). Service provider deposits the service tax (40%).

Now in this case who is entitled to take cenvat?

Are both eligible for their respective shares?

Regards

Replies (4)

Saravanan

Taxation

51 Points Joined February 2008

In all the cases, only the Service Receipient (SR) can avail CENVAT Credit.

In the case of the Service Tax (ST) remitted to the Service Provider (SP), the SR can avail the credit based on the invoice raised by SP and in the case of ST remitted by the SR, the Credit can be availed based on the GAR-7 i.e. the Challan for ST paid by him.

CA Ashish K Bansal

partner

175 Points Joined July 2011

I agree with sravanan cenvat credit can be taken for tax paid on input services and can be utilised to pay tax on output service . The servuce provider in case of partial reverse charge can take cenvat credit oof tax paid by him on his input service and can utilise it to pay his share of tax on out put service fir example if a isa manpowee supplier to b ltd if raises a bill of rs 1l akh he is liable to pay tax in 25000 which comes to rs 3090 now if has paid a tele phine bill of rs 10000 along wuth servuce tax if rs 1236 gis net tax liablity woukd be 3090 -1236=1854 as far as bltd is concerned they can tax cenvat if rs 3090 paid to a and rs 9270 after deoositing it thriugh challan so total cenvat credit avaikabke ti b ltd wiykd be 12360 now suppose bltd us in business of data entry and has provided services of rs 10 lacs its seevice tax liabkity woukd be 123600 -12360= 111240