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Input of service tax credit

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This query is : Resolved

Santosh (Querist)

10 February 2016 This is regard to Service Tax Input Credit.
We have Purchase Software and Party Raised us the bill adding Service Tax and Vat and Our Company providing 80% of Services Foreign base and 20% Domestic.

My Query is can we take 100% Service Tax & VAt input on this Service Tax and VAt Charge by party.

Suresh Ramaswamy

Suresh Ramaswamy (Expert)

12 February 2016 Basically your output comprises of 80% export of services and 20% taxable service. Input is common input. As per the provisions of CENVAT Credit Rules 2004, you can avail of full input credit by paying service tax @ 6% on the non taxable service. However, since export of service entitles one to refund of Input CENVAT Credit, you should utilize the CENVAT Credit pro-rata under Rule 6 (3A) of the CENVAT Credit Rules 2004 for the taxable service and claim refund of the balance towards export of service.

I am not very sure of the relevant provisions of VAT, but to the best of my knowledge, there is no such corresponding provision in VAT Acts to restrict the input pro-rata.

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