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service tax

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CA shainan shah (Querist)
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04 November 2009 My client is a bank.The Bank collects service tax from the customers.However they also pay service tax on Telephone,Courier Services,Audiors Remuneration etc.Now,suppose bank has collected 2000 rs(Two Thousand only) as Service tax and has paid service tax of rs.1133.00(Eleven Hundred Thirty Three)on auditors remuneration.Can bank take credit of all the amoount.Is there any ceiling of Cenvat Credit for banks.I read somewhere that the maximum credit u can avail is 20% of the total service tax liability.Kindly guide in this matter.

CA chandan kumar sahoo

CA chandan kumar sahoo (Expert)
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04 November 2009 your client can take full credit. there is no ceiling limit.

CA Deepak S

CA Deepak S (Expert)
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05 November 2009 In my opinion, the banks are having both taxable and non taxable services. Therefore the bank cannot take full credit of the inputs available. It can take credit only on the basis of Rule 6 of the Cenvat credit rules, 2004.

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