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Service tax credit

Saurabh Arora (Article) (88 Points)

14 December 2011

Hey all

Whether a company though has not started operations but registers itself in service tax, then whether input will be allowed and if so, on what payments will it be allowed and till what time can we carry forward that input to be availed in future.

Would appreciate valuable replies.

Thanks

Saurabh

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7 Replies

vishnupriya (CA Final) (1418 Points)
Replied 14 December 2011

https://as.ori.nic.in/cenexbbsr/st_credit.htm

please click above link

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Saurabh Arora (Article) (88 Points)
Replied 14 December 2011

Hey Vishnu

Thanx for the reply..

But on that link there is nothing mentioned of the fact that whether a concern which has not started its operations is eligible for input credit..

To be more specific this company which I am referring top is an Investement company which has recently been set up but nt started its operations..it has been paying service tax on rent etc. so I wanted to ask whether it can avail input on servcice tax paid on rent..

Can u guide me with any sections which I can refer to which can help me???

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 14 December 2011

NO input credit would be allowed unless the assesee provides taxable services/ taxable clearance where the excise duty is paid.

it can not be accumulated and the assesee has to book the service tax so paid as expenditure in their P/L account

vishnupriya (CA Final) (1418 Points)
Replied 14 December 2011

Agreed with US Sharma!

A person consumes input services for providing taxable service, then he can avail Cenvat credit when he receives the input in his premises and whole amount can be availed for Cenvat credit in case of input service when he makes payment of service tax amount to the service tax providers.

As per Rule 4 (7) of the CENVAT Credit Rules, 2004, the CENVAT credit on input services is available only on or after the day on which payment of the value of input service and service tax is made.

Conclusion: The Co. is eligible to claim only after providing services.

Saurabh Arora (Article) (88 Points)
Replied 14 December 2011

Can u please refer any sections which i can refer to clear my doubts..??

We just want to book service tax input which we are paying right now so that when our operations get started we can utilise this input at that time..

Can we do that, and if not which section i can refer??

Thanks

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vishnupriya (CA Final) (1418 Points)
Replied 14 December 2011

Please click below for clarification on availing Input services credit by CBEC

https://www.servicetax.gov.in/circular/st-circular10/st-circ-122-2k10.htm

Saurabh Arora (Article) (88 Points)
Replied 14 December 2011

Vishnu Thank u so much for the valuable replies..

But we have already been making payments on which service tax is charged from us.

We just havn't provided any services yeat to anyone.

So we just thought that we would book input on the service tax which we are paying right now and we would avail the credit once we start our operations and charging service tax..