Defination of Input Service

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vishnukant (Querist)

03 May 2008 hi all,
pl may someone tell me what is defination of "Input Services"?
mean to say (a)may we consider the services provided by a service provider from manufacturing a final product and upto Sale?

or (b)it's only services which are used upto manufaturing the final product?

(c)further if above (b)called input services, can we avail the Service tax credit, provided by a sevice provider inbetween, after manufacturing a final product and upto sale the same?

pl reply ASAP

Amit Sharma

Amit Sharma (Expert)

05 May 2008 Dear Vishnukant,

This will help you to understand better.

INTRODUCTION TO CENVAT CREDIT TERMINOLOGY:

„X All the rules are in accordance with CENVAT Credit Rules, 2004.
„X INPUT:- Input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer.
„X INPUT SERVICES:- used by provider of taxable service for providing an output service; or used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture if final products and clearance of final products from the place of removal.
„X OUTPUT SERVICES:- means any taxable service provided by the provider of taxable service, to a customer , client, subscriber , policy holder or any other person , as the case may be, and the expressions ¡§provider¡¨ & ¡§provided¡¨ shall be construed accordingly.

WAYS OF CLAIMING INPUT CREDIT (PRE BUDGET):

. 20 % rule :- which says that one can claim a max of 20 % of the total taxable service on which service tax has to be paid.

. Separate books of accounts: - which says that one will have to maintain seperate sets of books for service tax and therefore the input credit availed will be forgone , which meant to say that it cannot be carried forward.

WAYS OF CLAIMING INPUT CREDIT (POST BUDGET):

. 8 % rule:- which says that you can claim a max of 8 % of the total taxable services on which service tax has to be paid.

. Proporion basis:- which says that one will have to take the aggregate credit availed multiply it with the revenue earned divided by the total revenue earned by all the units of the company.

However is it said that on an average basis Proportion basis is preferred over 8 % rule.

vishnukant

vishnukant (Querist)

08 May 2008 Thanks a lot Mr. Amit

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