Can I Claim Cenvat credit under Reverse charge Mechanism if I have to pay service tax under RCM for GTA Services?
5 Replies
Aayan Aggarwal
(24 Points)
Replied 29 April 2016
IF YOU ARE PAYING SERVICE TAX ON 100% AMOUNT I.E WITHOUT AVILING THE BENEFIT OF ABATEMENT ONLY THEN YOU CAN CLAIM CENVAT CREDIT.AND IF YOU ARE AVILING ABTEMENT NO CCR SHALL BE ALLOWED.
Tanmay Tyagi
(STUDENT)
(209 Points)
Replied 29 April 2016
Dear Pranav,
In case of Reverse Charge Mechanism (RCM), the service tax liability has to be met in cash. There is no cenvat credit facility available to meet this liabilty.
The reason behind this is that:
The Cenvat Credit is available for payment of excise duty on final products/ service tax on Output services only. (Rule 3 of CCR, 2004) and as per the provisions of Rule 2(p) of CCR 2004, The term output service means any service provided by service provider located in taxable territory but shall not include a service;
a) specified in section 66D of Finance Act 1994.(Negative list)
b) Where whole of Service tax liability is of Service Recipient. (RCM).
Thus, it specifically excludes it.
In case of Reverse Charge Mechanism (RCM), the service tax liability has to be met in cash. There is no cenvat credit facility available to meet this liabilty.
The reason behind this is that:
The Cenvat Credit is available for payment of excise duty on final products/ service tax on Output services only. (Rule 3 of CCR, 2004) and as per the provisions of Rule 2(p) of CCR 2004, The term output service means any service provided by service provider located in taxable territory but shall not include a service;
a) specified in section 66D of Finance Act 1994.(Negative list)
b) Where whole of Service tax liability is of Service Recipient. (RCM).
Thus, it specifically excludes it.
chandra sekar
(Manager-Accounts)
(387 Points)
Replied 30 April 2016
it depends. If yu are a manufacturing co., and paying ED, yu can pay ST under RCM< and the same shown as Cenvat Credit agst ED payment.
Aayan Aggarwal
(24 Points)
Replied 30 April 2016
I AGREE WITH THE OPINION GIVEN ABOVE BUT THE QUESTION ASKED HERE IS THAT WHETHER CCR IS AVAILABLE WHILE DEPOSITING S.TAX THROUGH RCM ?
IT ALL DEPENDS ONLY ON abatement .
1- IF YOU ARE AVAILING ABTEMENT ONLY THEN YOU HAVE TO DEPOSIT IT IN CASH AND WILL NOT BE ABLE TO BOOK CCR .
AND
2- IF YOU ARE PAYING SERVICE TAX ON WHOLE AMOUNT YOU HAVE TO PAY THEOUGH PLA A/C AND YOU WILL BE ABLE TO BOOK CCR.
Niraj Kumar Sinha
(Sr. Officer, SPSIL)
(648 Points)
Replied 30 April 2016
Mr. Pranav
You can avail CENVAT credit of service tax paid on GTA under Reverse Charge.
Matter of abatement is applicable for Service Provider not the receiver.
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