Dilip Kadam (services) (119 Points)
01 October 2009dear all
i have paid services tax on office renovation( consider in fixed assets as a lease improvement ) ,. vendor has charged service tax on total amount of bill. can i utilize services tax input credit on above exp or require to capitalized that services tax part
Gautam Joshi
(Partner)
(361 Points)
Replied 01 October 2009
Hi Dilip,
Rule 4 of CENVAT Credit Rules, 2004 gives you an option to capitalize the Input ST Credit in costs of Fixed Asset and by that way you can take the benefit of Depreciation on such portion of CENVAT Credit. Otherwise you can avail and utilise the CENVAT Credit against any output liability.
This is also supported by the Guidelines of ICAI regarding treatment of CENVAT Credit. Refundable CENVAT Credit can never become part of costs of Fixed Assets and so should have been charged to P&L account but if its Non-refundable then you can undoubtedly capitalise it and take the benefit of Depreciation.
What is benefitial for you is to utilise it and not to capitlise it into fixed assets as the benefit of depreciation will be available in future while the benefit of CENVAT Credit will be available today itself if you pay your output service tax net off that CENVAT Credit.
Take your CENVAT Credit benefit today and not tommorrow.
Madhukar N Hiregange
(Chartered Accountant)
(39034 Points)
Replied 03 October 2009
If you are provding only taxable services the economic option would be to avail the ST credit and on that value not claim the depreciation.
NRkamath
(Accounts managerr)
(22 Points)
Replied 03 October 2009
we are a private limited company engaged in automobile servicing and we collect service tax on labour charges. at the same time we are paying service tax on telepone, security and other.
can we set off service tax paid against our collection
how this to be incorporated in return from
Gautam Joshi
(Partner)
(361 Points)
Replied 04 October 2009
Hi Kamath,
Tax on Labour charges for you is output liability for you and so in return under "Service Tax Liability". Also show in the same point number, the receipt amount and billing amount of labour charges.
Moreover, on CENVAT side, you are always eligible to take CENVAT Credit of Telephone and Security charges which should be an office expenses and not personal and in addition to that the invoices of the same should contain registration numbers and category of service provided.
Show CENVAT Credit received on these services in return format seperately and net off the tax liability.
Also show the challan numbers and dates of ST liability paid by you through challans.
Lastly, check your closing balance of CENVAT Credit with that of return. If its okie then return is true and fair.
CAclubindia
