Service tax charged by others

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This query is : Resolved

Akhilesh Kumar (Querist)

27 December 2014 how we can show the service tax charged by party in our books.

For example:

rent 45968
service tax 5682

total bill 51650.

CA Kumar Mukesh

CA Kumar Mukesh (Expert)

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/-

Akhilesh Kumar

Akhilesh Kumar (Querist)

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?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

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:
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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:

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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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