Credit of Service tax on work contract

This query is : Resolved

ATIT D SHAH (Querist)
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17 April 2011 Respected Sir,
I m engaged in business of providing works contracts, i have availed service of sub contractor who has raised bill of Rs. 800000/-( inclusive of Service Tax of Rs. 31656/- @ 4.12% under composition Scheme ), i have availed an option to pay service tax @ 10.30% on service portion, so can i take credit of Rs. 31656/- ??

If i have availed the option to pay service tax @ 4.12% under composition scheme can i avail the benefit of credit of Rs. 31656/- ??

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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17 April 2011 Where the service provider opts for the composition scheme for the purpose of payment of
service tax, he shall not take cenvat credit of duty and cess paid on inputs used in relation to
such works contract. However the credit on capital goods used for providing the service as well
as the input service credit (sub contractors, insurance, telephone, manpower supply, architect,
security, supply of tangible goods, etc) would be available.
Where the service provider does not opt for composition scheme, he should be entitled to
cenvat credit on inputs, input services and capital goods used in execution of such works contract.

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