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INPUT TAX CREDIT

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(Querist)
12 February 2009 What if Expenses (Lease Rent) along with Service Tax accrued in Oct~Dec'08 but paid in Jan~Mar'09. Whereas company did not have taxable income in Oct~Dec08 but It has 50% of revenue from Taxable Services, can the company claim set off of 50% of aforesaid service tax amount in Jan~Mar'09 (since set off of service tax is claimable in the period during which payment is made)

Also can the company carry forward Service Tax incurred on Lease Rent capitalised (during construction period) for set off against future taxable income (though it may provide exempt service in the interim period partly or fully)?
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CA Nitin Wadhwani

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CA Nitin Wadhwani (Expert)
12 February 2009 1.Service tax can be claimed in Jan-Mar'09.
2.Service Tax credit can be carried forward if there is no liability.
But if exempt services are provided, a separate set of books should be maintained to bifurcate the credit on the input services used in providing such services or else the credit will be restricted to 20% of total credit.
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