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Service tax credit for advance payments made

CA Rohit Gupta (Partner) (1982 Points)

02 April 2010

I have made an advance payment to input service provider for Rs. 150000 can i claim service tax credit on such payment using grossing up method

Also in respect of advance payment of mobile bill can i claim service tax credit on Rs. 3400 i paid in advance for full year on 22/02/2010 using grossing up method

Grossing up method i mean presuming i paid amount inclusive of service tax @ 10.3% and then calculating amount of service tax.

please reply immediately with relevant case laws on the matter if any.

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8 Replies

Ashish Sharma (Service) (1028 Points)
Replied 02 April 2010

Cenvat Credit can avail on payment, you can take cenvat credit on advance payment also.

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Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 02 April 2010

Originally posted by : rohitgupta

HI

I have made an advance payment to input service provider for Rs. 150000 can i claim service tax credit on such payment using grossing up method

Also in respect of advance payment of mobile bill can i claim service tax credit on Rs. 3400 i paid in advance for full year on 22/02/2010 using grossing up method

Grossing up method i mean presuming i paid amount inclusive of service tax @ 10.3% and then calculating amount of service tax.

please reply immediately with relevant case laws on the matter if any.

Dear Rohit,

In the absence of a valid document no cenvat credit can be availed. In case of advacne payment ask the servic eprovider to raise raise an invoice for advacne with ST and then only you can avail the credit. There is deemed credit provision presently for input services.

Warm Regards

Madhukar

Ashish Sharma (Service) (1028 Points)
Replied 02 April 2010

Originally posted by : Madhukar N Hiregange

Dear Rohit,

In the absence of a valid document no cenvat credit can be availed. In case of advacne payment ask the servic eprovider to raise raise an invoice for advacne with ST and then only you can avail the credit. There is deemed credit provision presently for input services.

Warm Regards

Madhukar

Yes,

I agree with u sir

CA.Swathi Jain (CA ) (155 Points)
Replied 02 April 2010

hi,

In case of any assessment the proof of payment of cenvat credit lies in the hands of the assesse. so it is better to get an invoice raised for the service tax paid and then avail cenvat credit on it..

CA Devender Chauhan (Group Financial Accountant) (1526 Points)
Replied 02 April 2010

Originally posted by : swathi jain
	hi, In case of any assessment the proof of payment of cenvat credit lies in the hands of the assesse. so it is better to get an invoice raised for the service tax paid and then avail cenvat credit on it..

agree

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Jitendra Kumar Chopra (Practicing Chartered Accountant) (20 Points)
Replied 11 August 2010

Dear Madhukar Sir,

In case of service tax input credit on advance payment without invoice, can we claim ST input credit.

Can we have any other valid document apart from Invoice for instance - a work order or Purchase order or Contract which stats the Service Tax applicability.

Can you please reply as soon as possible.

Rgds,

JKC