Input Credit, Service Tax

[Indrajit Mondal]

Dear All,

We also paying telephone bills/insurance premium for car and machineries which also includes service tax can we claim the input credit against the output liability.

Please reply..

Posts / Replies

[Rajagopalan Ranganathan]

Sir,

Service tax paid on telephone charges can be availed as input tax provided the telephone is used in the course of your business. Service tax paid on insurance premium paid in respect of machinery can be availed since they are used in the manufacture of final product. As per rule 2 (a) (C) of Cenvat Credit Rules, 2004,

"motor vehicle designed to carry passengers including their chassis, registered in the name of the provider of service, when used for providing output service of-

(i) transportation of passengers; or

(ii) renting of such motor vehicle; or

(iii) imparting motor driving skill.

If the motor vehicle possessed by you is for personal use of your employees or Directors etc., then you cannot avail the credit of service tax paid on insurance premium paid on such motor vehicles.

[Gorantla Bhaskar Rao]

Very rightly explained by Rajagopalji. I agree with him.