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Service tax Input Credit

Geetanjali (Practice) (99 Points)

27 September 2007

Hi,

Can we claim 100% input credit of service tax paid on Hiring Charges of Equipment?

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12 Replies

CA. Dashrath Maheshwari (TaXpert) (15103 Points)
Replied 27 September 2007

Yes, We absolutely can take the full credit for the same

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Geetanjali (Practice) (99 Points)
Replied 27 September 2007

I mean whether this credit is limited to 20% of Output tax liabilty or the full credit we can claim,if service provider provides both Taxable & Non Taxable Services.

(Guest)

whether we can avil cenvat credit on landline phones install at employees home and reimbursed from the co. and also can we take credit of mobile phone used by employees and reimbursed by the co.

MAHENDRA IYER (SERVICE) (315 Points)
Replied 27 September 2007

Firstly you need to check whether the input service has a direct nexus with the output service and separate records are maintained for the same if it is done so u can take 100% input credit. On the other hand if it is not so than you need to check under what category tax has been levied if it charged on the 16 specified services given in rule 6(5) irrespective of whether separate books are maintained or not input can be claimed 100%. If non of the above is fulfilled 20% of the tax amount can be claimed as input credit.

MAHENDRA IYER (SERVICE) (315 Points)
Replied 27 September 2007

Manisha in respect of your query you may refer to Rule 3(1) which states that Inputs and capital goods must be received in the premises of the output service provider i.e premises in respect of which the output service provider has been granted registeration, hence input credit on landlines installed at employees home will not be allowed as credit.

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manohar nagula (service) (45 Points)
Replied 29 September 2007

only land line phones used in factory are allowed to take credit of service tax. these phones are directly used in relation to manufacture of excisable goods. mobile phones used by salesmen/market field are allowed, but actual payment should paid by the company through cheque, thorough reimbursement is not allowed.

manohar nagula (service) (45 Points)
Replied 29 September 2007

yes. allowed to take credit of service tax provided the machine is used for production of excisable goods

(Guest)

We have ST registration under Three catagories as a Network Integrator. They are 1. Installation and erection 2.Maintenance and Repair 3.Testing and certifications We perform these tasks through our own staff as well as outsourced from other parties. Proportion of outsourced Testing services is high while that of Maintenance repair is low. Can we avail credit of input tax paid for testing from output tax charged for say Maitenance and repair or visa versa? In some of the months we have only output Maintenance tax (To be paid) while we have only testing (Credit ) as input . Pl clerify that this is O.K. as per law or else suggest what we should do. Thanks

MAHENDRA IYER (SERVICE) (315 Points)
Replied 03 October 2007

As long as u are able to prove the nexus between the input service utilised and output service provided input credit can be utilised even for the outsourced job.

(Guest)

can we utilise the input credit of service tax paid of march 08 in april 08 service tax payment?

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MUKESH CHAUDHARY (PROFESSION) (0 Points)
Replied 14 December 2008

My client is providing services of Banking & Financial Services. Rent payment in respect of Bank premises.. whether input credit can be claimed on such payment of rent? In addition, can I take 100% input credit from my service tax liability.

OFFICESELVA (Service) (515 Points)
Replied 14 December 2008

Input service credit can be availed on Rent. 100% credit can be availed if no exempted service is rendered. In other words service tax is paid on all the income of the company.