10 February 2016
This is regard to Service Tax Input Credit. We have Purchase Software and Party Raised us the bill adding Service Tax and Vat and Our Company providing 80% of Services Foreign base and 20% Domestic.
My Query is can we take 100% Service Tax & VAt input on this Service Tax and VAt Charge by party.
12 February 2016
Basically your output comprises of 80% export of services and 20% taxable service. Input is common input. As per the provisions of CENVAT Credit Rules 2004, you can avail of full input credit by paying service tax @ 6% on the non taxable service. However, since export of service entitles one to refund of Input CENVAT Credit, you should utilize the CENVAT Credit pro-rata under Rule 6 (3A) of the CENVAT Credit Rules 2004 for the taxable service and claim refund of the balance towards export of service.
I am not very sure of the relevant provisions of VAT, but to the best of my knowledge, there is no such corresponding provision in VAT Acts to restrict the input pro-rata.
CAclubindia
