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CENVAT CREDIT DISCLOSURE IN SERVICE TAX RETURN- PRACTICAL ASPECTS PART 1

Service Tax - By: - ashish chaudhary - Dated:- 22-10-2015 - Tax credit in any value added taxation is the second most important aspect after the levy as it goes to reduce the basic cost. If credits are not available fully, it adds to the cost of the product or service resulting in cascading effect of taxes. It becomes imperative for assessee to ascertain the credit availability and to ensure that it is disclosed properly in the return. It has been seen that large numbers of errors are committed .....

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Rule 6 In this article, we have covered important practical aspects along with the manner of disclosure in the return relating to Availment of Credit . Other two areas would be covered in the next two series. Every assessee registered under service tax law is required to file service tax return. The return is segregated in different parts for disclosing value of services provided, tax paid, challan details and cenvat credit details. Relevant portion of return where details of credit is to be dis .....

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redit columns of current period. But it should never be adjusted from the opening balance. Part I3.1.2: Credit availed: This should be disclosed monthwise/ quarterwise separately for input, input service and capital goods. Following should be taken care of while availing the credits Part: I3.1.2.2 Capital Goods: Definition of capital goods is different from financial accounting/Income Tax. Definition of capital goods as given under Rule 2 (a) of Cenvat Credit Rules, 2004 (CCR) should be examined .....

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r, the excise duty would be embedded in the cost of product and service provider will not be eligible to take the credit on it. If eligible, credit should be availed 50% in the year of purchase and balance in subsequent year. No necessity of being put to use for availing the credit. If service tax is paid on erection/commissioning/installation of capital goods, credit can be taken fully in first year itself. (not 50%-50%) Credit can be taken fully even if capital goods partly used for providing .....

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full credit even if partly used for taxable service and partly for exempted service. But when some specific condition imposed in some other notification, those restriction prevail over Cenvat Credit Rules) Capital goods which fall under specified chapter heading but used exclusively for providing exempted service, credit should not be taken. In case of import of Capital goods, CVD can be taken as credit. SAD credit not allowed to service providers. I3.1.2.3 Input Service: This is the area of maj .....

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to be taken and shown in the column. Credit can be taken based on the invoice of vendor even though no payment made to him. If not paid within three months, required to reverse the credit. This may be availed again on payment basis. Certain disputed service: There are certain disputed services as regards to credit eligibility. Eligibility of credit can be ascertained based on following thumb rule: Set up of office or premise of service provider: credit not allowed Repair/moderniation/renovation .....

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ice. For return filing in October 2015, may be taken beginning from April 2014 onwards if missed out earlier. (This can be done by showing credit of invoice received in April 2014 in the month of April 2015 and so on) Services used for export of services to be disclosed in the return under availment column to claim the refund. I3.1.2.1 Input: Excise duty paid can be taken as credit subject to definition of input as provided under Cenvat Credit Rules, 2004. The decision whether credit is eligible .....

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