28 December 2014
If you eligible for Service input under rule 2(k) of CCR 2004, then the entry will be Expenses Dr 45,968/- Service Tax received Dr. 5,682/- To Party 47,053/- To Tds (if applicable) 4,597/-
If you not eligible for Service input under rule 2(k) of CCR 2004, then the entry will be Expenses Dr 56,510/- To Party 47,053/- To Tds (if applicable) 4,597/-
29 December 2014
Thanx a lot Kumar Mukesh for your help, Can you please suggest me my company is a it/ Staffing company if we are eligible for service tax input or not?
24 July 2025
Yes, as an IT/Staffing company, you are likely eligible to claim input credit of service tax charged by vendors (like on rent, professional fees, etc.) — provided certain conditions under the CENVAT Credit Rules, 2004 are met.
✅ When You Can Take Input Credit: You are a Service Provider and:
You charge service tax to your clients
You are registered under Service Tax
The input service is used in or for providing taxable output services (like staffing, IT consulting, etc.)
The service tax invoice is:
In your company's name
Shows valid service tax registration number of the vendor
Matches services relevant to your business (e.g., office rent, internet, recruitment agency, etc.)
You are not claiming abatement on your output service that disallows credit (check specific rules)
🚫 When You Cannot Take Input Credit: If your output services are exempt from service tax
If you're under a composition scheme or abatement that disallows credit
If the invoice is not valid (e.g., incorrect vendor ST registration)
If the expense is for personal use or ineligible category (like food, entertainment, personal rent, etc.)
🧾 Example Entry (Eligible for Input Credit): Assume invoice:
Rent: ₹45,968
Service Tax: ₹5,682
Total: ₹51,650
Journal Entry: css Copy Edit Rent Expense A/c Dr. 45,968 CENVAT Credit (Input ST) A/c Dr. 5,682 To Party (Vendor) A/c 51,650 If TDS applicable, modify as:
css Copy Edit Rent Expense A/c Dr. 45,968 CENVAT Credit (Input ST) A/c Dr. 5,682 To Party A/c 47,053 To TDS Payable A/c 4,597 📌 What You Should Do: Yes, as an IT/staffing company, you can avail CENVAT credit if you're charging service tax to clients and using input services to deliver those services.
Maintain valid ST registration, invoices, and proper classification of services.
File ST-3 returns accordingly and claim credit in the eligible period.
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