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TMI BlogReversal of Cenvat credit under rule 6(3A) of Cenvat credit rules 2004 : 3/3X X X X Extracts X X X X X X X X Extracts X X X X ..... Reversal of Cenvat credit under rule 6(3A) of Cenvat credit rules 2004 : 3/3 X X X X Extracts X X X X X X X X Extracts X X X X ..... ers after availing abatement of 75% * Exempt Service - Interest from bank C' receives interest from bank on fixed deposits 'C' avails CENVAT credit on common services used for providing abovementioned taxable and exempt services. Hence, 'C' needs to reverse proportionate CENVAT credit attributable to provision of exempt services under rule 6(3A) of CENVAT credit rules 2004. Option 1 Option 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Option 3 Particulars Description of Service Revenue as per P&L a/c (AS 7) (Rs) % of Demand on which Service tax is paid (Rs) Demand raised (Rs) Remarks Taxable Service Construction service 80,000 25,000 1,00,000 Service tax is paid on 25% as per provisions of Notification 26/2012 Exempt Service Interest on fixed deposit 10,000 10,000 10,000 Covered under Negative list as per se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 66D of Finance Act 1994 CENVAT Credit availed on Common services ₹ 25,000 Formula for reversal of CENVAT credit on Common services Exempt Services provided ------------------------------------ X [ Cenvat Credit availed on Common (Exempt services provided + Services] Taxable services provided) Cenvat credit to be reversed 10,000 ----------- [10,000 + 80,000] X 25,000 = ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 2,778 10,000 ----------- [10,000 + 25,000] X 25,000 = ₹ 7,143 10,000 ----------- [10,000 + 1,00,000] X 25,000 = ₹ 2,273 According to section 65B(51), "taxable service" means any service on which service tax is leviable under section 66B Which option is correct and why ? Reply By CA Venkata prasad Pasupuleti: The Reply: Interest on fixed deposit need not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered for reversal of credit u/r 6(3) r/w 6(3A) of CCR, 2004. Please see Explanation I followed by Rule 6(3D) of CCR, 2004 Reply By CA Venkata prasad Pasupuleti: The Reply: As per my view, Option 3 is correct. This is because turnover shall be determined going by Section 67 of Finance Act, 1994. As per this, Value is 1.00L (construction) and not as per P&L A/c. further if you take 25,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- as taxable value for reversal calculation then you have to treat balance 75,000 as exempted service which is not required as per CCR, 2004 X X X X Extracts X X X X X X X X Extracts X X X X
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