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Quantum of input credit on service tax

Vandana (Student) (70 Points)

23 December 2011

Can Credit on service tax paid for input services be availed fully i.e. 100% from 1st April 2011? Please clarify....Tel me the percentage or quantum of credit that can be availed for input services like

Telephone, Internet Charges, Courier, Rent, Repairs, Insurance, Travelling, Professional fees, Commission

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4 Replies

Jilesh (Executive Internal Audit) (30 Points)
Replied 29 December 2011

If peson is registered than 100% credit for input service is available.

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CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 30 December 2011

Credit is available on input services across goods & services since introduction of CENVAT Credit Rules, 2004. But where you are providing taxable as well as exempted services, Rule 6 of the above mentioned Rules would be applicable & credit would be availabe accordingly.

But in above case also, full credit of Specified Services would be applicable.

"6 (5) Notwithstanding anything contained in sub-rules (1), (2) and (3), credit of the whole of service tax paid on taxable service as specified in sub-clause (g), (p), (q), (r), (v), (w), (za), (zm), (zp), (zy), (zzd), (zzg), (zzh), (zzi), (zzk), (zzq) and (zzr) of clause (105) of section 65 of the Finance Act shall be allowed unless such service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted services."

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 30 December 2011

If any of the above services relate to exempted/non-taxable service or production of non-dutiable goods, only proprotionate credit is available. P. note that Rule 6(5) no longer exists.

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CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 30 December 2011

Thanks Mr. Nair,

I inadvertently ignored the amendments brought to CENVAT Credit Rules, 2004 through Notification No.3/2011-CE(NT) dated 01.03.2011, wherein the above sub-rule 6(5) has been omitted. Thanks again.