Claim of service tax input in case of reverse charge
This query is : Resolved
08 July 2014
Dear Sir/Mam
If the service recipient is a company and it is taking a security service from individual.service provider charges the service tax at 12.36 and the company paid the whole amount. company is also make the payment under reverse charge. then can company claim the input of whole amount charged by the service provider?
If the service recipient is a company and it is taking a security service from individual.service provider charges the service tax at 12.36 and the company paid the whole amount. company is also make the payment under reverse charge. then can company claim the input of whole amount charged by the service provider?
16 July 2014
Under reverse charge Mechanism input is allowed only on payment of service tax under GAR7.In my opinion you can make payment and take cenvat credit on payment
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16 July 2014
Relevant Budget Update FYI:-
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Time limit for taking Cenvat credit when service tax payable under reverse charge basis:-
**********
When partial service tax is payable by service receiver –
1)When partial service tax is payable by service receiver, the Cenvat credit can be taken only after making payment to the service provider of the value of input service and service tax
[second provisio to rule 4(7) of Cenvat Credit Rules, inserted w.e.f. 1-9-2014].
[There is drafting mistake. Really, in respect of service tax charged by the service provider in his invoice, that portion should be allowable immediately on receipt of invoice. This is clear from the third proviso to rule 4(7) as stated below.]
If payment is not made to service provider within three months, the Cenvat credit taken should be reversed (as per section proviso to rule 4(7) as presently worded, the Cenvat credit cannot be taken at all. Then where is the question of reversal?). Later, when he makes payment of invoice value and service tax to service provider, he can take back the Cenvat credit, which he had reversed earlier
[third provisio to rule 4(7) of Cenvat Credit Rules, inserted w.e.f. 1-9-2014].
2)In case of portion of service tax payable by service receiver under reverse charge, the Cenvat credit should be taken within six months from date of payment by GAR-7 challan/internet payment – sixth provisio to rule 4(7) of Cenvat Credit Rules, inserted w.e.f. 1-9-2014.
.
Time limit for taking Cenvat credit when service tax payable under reverse charge basis:-
**********
When partial service tax is payable by service receiver –
1)When partial service tax is payable by service receiver, the Cenvat credit can be taken only after making payment to the service provider of the value of input service and service tax
[second provisio to rule 4(7) of Cenvat Credit Rules, inserted w.e.f. 1-9-2014].
[There is drafting mistake. Really, in respect of service tax charged by the service provider in his invoice, that portion should be allowable immediately on receipt of invoice. This is clear from the third proviso to rule 4(7) as stated below.]
If payment is not made to service provider within three months, the Cenvat credit taken should be reversed (as per section proviso to rule 4(7) as presently worded, the Cenvat credit cannot be taken at all. Then where is the question of reversal?). Later, when he makes payment of invoice value and service tax to service provider, he can take back the Cenvat credit, which he had reversed earlier
[third provisio to rule 4(7) of Cenvat Credit Rules, inserted w.e.f. 1-9-2014].
2)In case of portion of service tax payable by service receiver under reverse charge, the Cenvat credit should be taken within six months from date of payment by GAR-7 challan/internet payment – sixth provisio to rule 4(7) of Cenvat Credit Rules, inserted w.e.f. 1-9-2014.
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