Input credit of services on works contract

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Querist : Anonymous

Querist : Anonymous (Querist)

27 August 2013 A contractor Can claim Input credit of services on works contract while paying service tax on reverse charge mechanism? will he get credit in full or partly?

CA Suresh Jain

CA Suresh Jain (Expert)

27 August 2013 Any amount payable under RCM has to be paid in cash. payment from CENVAT credit in case of RCM is not allowed.

CENVAT credit is available against the amount paid under RCM which can be utilised for payment of service tax payable as provider of service

disclaimer- all answers are given as per the facts narrated by you. Answer may differ after study of full facts/statements/agreements etc. involved in the case

Querist : Anonymous

Querist : Anonymous (Querist)

28 August 2013 Sir, Say for Contract Receipt of Rs. 10 Lakhs on Rs.7 Lakhs he is paying VAT, out of Balance on RCM basis of Rs.150,000 is laible to Service tax by contractor and he has consumed Input Services of Rs.100,000 + Service Tax Rs.12360/- will he get input credit of Rs.12360/- or not?

CA Suresh Jain

CA Suresh Jain (Expert)

28 August 2013 I looks that the it the person who is providing the service and raised the bills for Rs. 10 lakh. He is required to pay service tax on Rs. 3,00,000 @ 6%.18%. He can adjust the credit of CENVAT.

But, The recipient of service or to whom this contractor billed Rs. 10 lakh has to pay 6.18% of 3 lakh in cash only

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