Cenvat credit

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Querist : Anonymous

Querist : Anonymous (Querist)

29 October 2012 One of my Client is Tour Operator, Rail Travel Agent & Air Travel Agent. Cenvat Credit is available on Rail & Air Travel Service.
1. How to claim cenvat credit of service tax paid on telephone expenses?

2. Whether Service tax paid on rent on immovable property can be claimed ?

CA Sahil Singla..

CA Sahil Singla.. (Expert)

29 October 2012 1. Whatever paid as service Tax in telephone bill, claim the same as Cenva

2. Yes. Service tax paid on rent can be claimed as credit.

Querist : Anonymous

Querist : Anonymous (Querist)

30 October 2012 How can i claim full cenvat credit when telephone is also used for service on which CC is not allowed?

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

19 July 2024 To claim full Cenvat credit when a telephone service is used for both taxable and non-taxable purposes, you can follow the method of apportionment based on actual usage for taxable services. Here’s a step-by-step approach:

1. **Determine Usage**: Assess the actual usage of the telephone service between taxable (services on which Cenvat credit is allowed) and non-taxable (services on which Cenvat credit is not allowed) activities. This determination should be based on records or a reasonable estimation.

2. **Document Usage Ratio**: Maintain records or documentation that clearly show the proportion of telephone usage allocated to taxable and non-taxable activities. This could be based on call logs, bills, or any other relevant documentation that supports the usage ratio.

3. **Apportionment of Credit**: Calculate the Cenvat credit eligibility based on the proportion of telephone usage attributable to taxable services. For example, if 60% of the telephone usage relates to taxable services, you can claim 60% of the Cenvat credit on the input service.

4. **Maintain Records**: Keep detailed records of the methodology used to apportion the credit and the calculations made. This documentation will be essential in case of tax audits or scrutiny to demonstrate compliance with Cenvat credit rules.

5. **Compliance and Documentation**: Ensure that the method of apportionment is reasonable and consistently applied. It should reflect the actual usage of the telephone service for taxable activities to support the claim of full Cenvat credit on eligible inputs.

By following these steps, you can effectively claim the full Cenvat credit to which you are entitled while complying with the requirement to apportion credit based on actual usage for taxable and non-taxable activities. This approach helps in maintaining compliance with tax regulations and ensures that the credit claimed is supported by appropriate documentation and records.

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