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Query about Service Tax Input Credit

Pravesh Kumar (Still Learning) (163 Points)

12 February 2011

Dear Experts,

I am Working with a IT company who deals in Computer Hardware, AMC of Computers, IT Services, Domains Sale, Web Hosting Services.

On Web Hosting Services & Misc Technical Services we are liable to pay Service Tax.

My Query Is for which services I Can Take Input Credit and how and how much against said services.

Thanks

Pravesh

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14 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 12 February 2011

you can take credit on "input services" which are required to provide the "taxable output services" and set off the input tax against output tax payable.

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Pravesh Kumar (Still Learning) (163 Points)
Replied 12 February 2011

Dear Mr. Sharma,

Thanks for reply. can you please tell me in details if an example can be produced i would be obliged.

Thanks

:-)

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 12 February 2011

if you charge service tax from service receipents, then its taxable service

service tax if any you paid on the service received by you , in course of providing the service to your receipent, is available to you for input credit.

say u paid 10000 for a hosting service plus 1030 as service tax, and u provided server rent to your client for 12000 plus 1236 service tax.

at the time of payment of service tax of 1236, you are eligible to get input credit of 1030 service tax you have paid on hosting service, so your net service tax liability is 1236 minus 1030 = 206 only

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Pravesh Kumar (Still Learning) (163 Points)
Replied 12 February 2011

Thanks for again replying.

actually problem is... we are a company who is doing so much of activities... like telephone we use for sale and for service also. internet used for other work and this work can we take input credit of expenses... if we can please tell me how and in which proportion.

please reply with some example as what u told me above in example is very helpful.

Thanks

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 12 February 2011

1) a company once start paying service tax, he can not avail exemption in the financial year, i.e after paying service tax, u can not avail exemption.

2) input credit regarding service tax and excise in common services u can rough calculation of % of these services used in service tax, however service tax paid on input services can be used in excise output payment also, ( u can see the same in cenvat credit column in excise return ER1)

3) if the other work ..........is billed by your company ..........then only u have to reverse the proportionate share of internet exp, otherwise take full credit.

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sandesh mundra (ca) (94 Points)
Replied 13 February 2011

If a client has following sales:-

Sales - Goods - Rs.100
Sales - Taxable Services - Rs.150
Sales - Exempt Services - Rs.175

Total Input Credit - Rs.15

In what proportion can we take the input credit?

As per cenvat credit rules, if there is cenvat credit on common service then credit upto the proportion of taxable service is to be availed. However, there is no clarification with regards to trading activity.

We shall take stand that if there is any cenvat credit directly attributable to trading activity or non taxable service, then such cenvat credit should be lapsed.

If there is any cenvat credit directly attributable to taxable service then such cenvat credit shoule be fully availed and if there is any cenvat credit from input service utiilised in common for all three - trading activity, taxable service and exempt service, then portion of trading activity shall be considered as a part of non taxable service and then that proportion has to be applied.

In the example taken:-

Total revenue is Rs.425/-
Taxable service is Rs. 150/-
Proportion appicable would be 35.29%

Hence, availabe cenvat credit would be Rs. 15 * 35.29% = Rs. 5.29

pradeep (accounts executive) (33 Points)
Replied 11 September 2012

Hi Solve this query if the company is service recepient paying service tax under reverse mechanism how said company will avail cenvat credit on @ 75% portion (directly to the Service Tax Dept.) and @ 25% service tax paid to the service provider (SECURITY AGENCY) without having same nature of income under the said head And One more thing being a company paying service tax on the directors services @ 100% reverse charge mechansim how should company proceed to vail the cenvat credit ---PLS SPECIFY THE SAMPLE ENTRIES

Prasanta Kumar Mohanty (Senior Executive (Finance)) (21 Points)
Replied 11 October 2012

Dear Sir,

At present I am working with EPC Contractor i.e. we are doing construction/errection/installation job for power plant. So we are received some service which are belongs to COMMON SERVICE (for ex:- Vehicle Rent, Mobile charges, Manpower supply).

Now my question is that how to calculate service tax INPUT Against common service.

Regards,

Prasanta

pragatheeswaran (Accounts Executive) (24 Points)
Replied 17 December 2013

Hi Friends,

I need service tax output tax & input tax calculation file.

and explanation.

pragatheeswaran (Accounts Executive) (24 Points)
Replied 17 December 2013

Hi Friends

I have one doubt,If we give any service bill to outside country. can we add including service tax, Can't we?.

My Guess. Yes.

Plz tell me, what is correct?

im waiting for your reply

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Prasad (Sr. Manager) (617 Points)
Replied 17 December 2013

For the question billing to customers outside India, please check Place of Provision rules vide Notification 28/2012. If you satisfy the confiditions you dont have to charge service tax on the bills raised outside the country.