Cenvat Credit on Works Contract

Others 1636 views 2 replies

Srikanth

Manager Finance

31 Points Posted on 02 March 2010

Dear Sir,

Good day to you, Appreicate your support in helping me out in clarifying my friend is having a Interiror Desigining Firm which executes works contract for the clients.

we collect 4.12% service tax on whole work order.

please let me know whether we can take cenvat input credit for the phone bills which we use for the official purpose , and input service tax paid for the consultants who work on behalf of us at the site etc. and also please let me know when to pay the service tax . whether we have pay once the invoice is done at the end of the project completion or as and when we recieve the advance from the client for the execution of the work if so as and when we recieve the advace, request you to tell me how much percentage of service tax has to be paid out of the advance received.

thanks

Srikanth Alladi

9703020990

Replies (2)

Amit Chadha

Partner

35 Points Posted on 19 March 2010

dear srikant,

when you are collecting service tax based lump sum scheme and not at full rate of 10.3% then you are not eligible to take input credit of service tax paid.

service tax needs to be paid on the raising of bill or receiving advance against the same whichever is earlier.

and service tax is to be calculated at on reverse working where advance payment received is inclusive of service tax

Regard

Amit Chadha

Pragnesh

AM - Taxation

1259 Points Posted on 19 March 2010

Brother if you are collecting 4.12% ST it means you are following composit scheme of WCT. under this shceme you are not eligible for input credit. Also last date for payment of ST is 6 of every month in case e payment other wise 5 of every month. ST liability is based on your receipt of income wih ST. For e.g if you have received in month of MAy then liability will due in June month. In case if you have received advance then reverse calculation is required. Regards

Pragnesh