CA Shyamal Mistry (M.Com, A.C.A.) (128 Points)
17 October 2012Dear friends,
When, as an employer, we provide residential telephone to employee, and hence, employer is paying the bills.
So, whether the employer can claim Service Tax Credit on the amount of service tax mentioned in that phone bill.
Regards,
Shyamal
CA Shyamal Mistry
(M.Com, A.C.A.)
(128 Points)
Replied 17 October 2012
But there is no relation with the business activities.
sourav jain
(INTERNAL AUDITOR)
(128 Points)
Replied 17 October 2012
i think It can only be claimed if the telephone bill is issued in name company and not the employee
CA Shyamal Mistry
(M.Com, A.C.A.)
(128 Points)
Replied 17 October 2012
m satisfied with Mr. Sourav..........but is there any provision regarding the same in the Act.....???
Assume Telephone bill of Rs. 3,371/-
Telephone Expenses A/c Dr. 3,000
Service Tax Credit A/c Dr. 371
To Bank A/c 3371
The service tax can be claimed as Rs. 3,000/- will be transferred to employee as perquisite.
The payment of service tax is important for claiming input tax credit.
And further, it is company's expense whether in form of perquisite or telephone charges .
Clear???
(1) An output service provider shall be allowed to take credit (hereinafter referred to as service tax credit) of the service tax paid on input service in the following manner, namely:-
(a) where the input service falls in the same category of taxable service as that of output service, service tax credit shall be allowed to be taken on such input service for which invoice or bill or challan is issued on or after the sixteenth day of August, 2002; (b) in any other case, service tax credit shall be allowed to be taken on such input service for which invoice or bill or challan is issued on or after the fourteenth day of May, 2003:
Provided that the output service provider shall be allowed to take such credit, on or after the day on which he makes payment of the value of input service and the service tax paid or payable as indicated in invoice or bill or challan referred to in sub-rule (1) of rule 5.
(2) For the purposes of these rules, two services shall be deemed to be falling in the same category of taxable service, if the input service and output service fall in the same sub- clause of clause (105) of section 65 of the Act.
The basic necessity is you have to utilise the service, what you have already done as the employee is using it on your behalf and to say for your business.
pradeep
(accounts executive)
(33 Points)
Replied 18 October 2012
Pradeep Nainawati
(ACA)
(496 Points)
Replied 18 October 2012
Hi Shyamal,
You can`t take the CENVAT credit of Service Tax mentioned on telephone bill as this is for personal use of employee. Rule 2(I) of CENVAT Credit rules clearly states that services which are used for providing output services or manufacture of Final Products and its clearance up to the place of removal are Input Services.
And even if we assume for a moment that telephone was fully used by employee for official purpose then also it will be very difficult to prove the same to ST Officer. Your cost will exceed your benefit.
CA Shyamal Mistry
(M.Com, A.C.A.)
(128 Points)
Replied 18 October 2012
But it is a kind of perquisite provided by the employer.........it is simply an expense to the employer........whether it is for employee's personal use or not.
Pradeep Nainawati
(ACA)
(496 Points)
Replied 18 October 2012
There are lots of other perquisites on which you can`t take CENVAT credit.
To take CENVAT credit it should fit into the definition of "Input Services" as given in rule 2(I)
CAclubindia
