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Cenvat credit -periodicity

nitin suvarna (C.A FINAL) (828 Points)

13 June 2012

hi friends,

can anyone clarify whether cenvat credit of service tax has a periodicity restriction ie. credit to be used within a particular period as per rules .please refer the sec or rules accordingly.....

regards,

nitin s

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5 Replies

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 14 June 2012

Hi NItin,

I was also searching for the solution of the same query.

Came up with this:-

One can avail the balance of unutilised credit in the next financial year subject to rendering of services for a continuous period of time i.e. one has to be continuing ot render services in the next year also to avail the benefit of unutilised credit.

nitin suvarna (C.A FINAL) (828 Points)
Replied 14 June 2012

sir,

i have heard from friends (not sure) that in the point of taxation rules there is some restriction (below 100 days) ,any idea about it. I want to make sure that i have cleared my doubt ,also i am giving my attempt in nov but the indirect taxation part is still pending ..

thx

regards,

nitin s

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 14 June 2012

Hi Nitin,

Cenvat credit will be allowed on “receipt of invoice” as against on “payment of value of taxable service along with service tax”. It is also provided that if payment of value of input service and service tax thereon remains unpaid for 3 months from the Invoice date, the amount of credit initially availed needs to be paid. The amount so paid will be subsequently available as credit upon payment of value of input service and service tax thereon. Hence, it is not 100 days, but 3 months.

Hope this helps.

nitin suvarna (C.A FINAL) (828 Points)
Replied 14 June 2012

sir u mean the provisions which apply for tds -sec 40 (a) (ia) (payment & subsequent availability )also applies here,with a different period.

one query in regards to cenvat credit available of previous years ,whether the rules apply to them also & confirm whether these are mentioned in the point of taxation rules or otherwise. The applicability is from 1.4.2012 or otherwise ,please confirm .

thanx

regards,

nitin

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 14 June 2012

Yes it is specifically mentioned in the Point of Taxation rules that Cenvat credit shall be treated as mentioned earlier. CC & PoT are attracted only when there is a change in effective rate of tax. So, 01.04.2012 is the date.

And I am not sure about TDS query you are asking. That is a separate issue, it relates to admissibility of TDS even if payment is made after due date.