St on telephone bill, repair & maintenance
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
15 July 2012
Can i deduct input service charges(ST on Telephone Bill, Hotel Bill, Restaurant Bill, Etc.) from the output service charges before paying service tax in government account?
please answer me..
thanking you..
please answer me..
thanking you..
15 July 2012
Sir, Kindly indicate name of your output services to decide whether the input services mentioned in your query is related or not.
Normally, if you are doing only taxable service then you are eligible to claim almost all the input services including capital goods.
Normally, if you are doing only taxable service then you are eligible to claim almost all the input services including capital goods.
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Querist : Anonymous
Querist :
Anonymous
(Querist)
15 July 2012
i am doing a business of travel agency and transport services..
where i charge service tax..
where i charge service tax..
25 July 2025
Thank you for the clarification — since you're providing **taxable services as a travel agent and transporter**, the question now is whether you can **claim input service tax credit (CENVAT credit)** on expenses like:
* **Telephone bills**
* **Hotel bills**
* **Restaurant bills**
* **Repair & maintenance**
Let's go step by step:
---
## ✅ Applicable Law in July 2012: **CENVAT Credit Rules, 2004**
Under **Rule 2(l)** of the CENVAT Credit Rules, *input service* includes:
> "any service used by a provider of output service for providing an output service."
So the **test** is whether the input service is **used for providing taxable output services** (in your case: travel agency/transport).
---
## 💡 Your Output Services:
* **Travel agency service** – taxable
* **Transport of passengers or goods** – if taxable, then eligible for input credit
---
## 🧾 Eligibility of Input Credits (Your Expenses):
| Input Service | CENVAT Credit Eligibility | Comments |
| ------------------------ | ------------------------------ | ------------------------------------------------------------------------------------------------------- |
| **Telephone Bills** | ✅ Yes | If used in office/admin for business operations |
| **Hotel Bills** | ✅ *Conditional* | Allowed if incurred **for business purpose** (e.g., stay during tour arrangement for clients/employees) |
| **Restaurant Bills** | ❌ Not allowed (from July 2011) | Credit on **outdoor catering/food/beverages** specifically **excluded** under Rule 2(l) |
| **Repair & Maintenance** | ✅ Yes | If it relates to office/vehicles/assets used for providing taxable services |
---
## ⚠️ Important Exclusion (Post July 1, 2011):
> **Negative List & Exclusion Clause** in Rule 2(l) states that **"services primarily for personal consumption"** are not eligible.
That means restaurant/hotel bills used for **personal or employee entertainment** would **not qualify**.
---
## ✅ Can You Offset These Inputs Against Output Tax?
Yes — you can **deduct eligible input service tax credit** (telephone, repairs, etc.) from your **output service tax liability** before paying to the government.
> 📌 Provided: You maintain proper **invoices**, **use is for business**, and **services are taxable**.
---
## 🧮 Example:
| Particulars | Amount (₹) |
| ------------------------------------------- | ---------- |
| Output service tax (collected from clients) | 10,000 |
| Eligible input ST credit (telephone, R\&M) | 3,000 |
| **Net tax payable** | **7,000** |
You pay only ₹7,000 to the government and adjust ₹3,000 through CENVAT credit.
---
## 📝 Summary:
| Service | Credit Allowed? | Notes |
| --------------------------------- | --------------- | --------------------------------------------------------- |
| Telephone (business) | ✅ Yes | Fully allowed |
| Hotel (business trip) | ✅\* Partially | Allowed if clearly business-related |
| Restaurant (meals) | ❌ No | Blocked credit |
| Repairs (assets used in business) | ✅ Yes | Allowed if directly or indirectly used in taxable service |
---
Let me know if you’d like a **CENVAT credit ledger format** or help filling the **ST-3 return** with these credits.
* **Telephone bills**
* **Hotel bills**
* **Restaurant bills**
* **Repair & maintenance**
Let's go step by step:
---
## ✅ Applicable Law in July 2012: **CENVAT Credit Rules, 2004**
Under **Rule 2(l)** of the CENVAT Credit Rules, *input service* includes:
> "any service used by a provider of output service for providing an output service."
So the **test** is whether the input service is **used for providing taxable output services** (in your case: travel agency/transport).
---
## 💡 Your Output Services:
* **Travel agency service** – taxable
* **Transport of passengers or goods** – if taxable, then eligible for input credit
---
## 🧾 Eligibility of Input Credits (Your Expenses):
| Input Service | CENVAT Credit Eligibility | Comments |
| ------------------------ | ------------------------------ | ------------------------------------------------------------------------------------------------------- |
| **Telephone Bills** | ✅ Yes | If used in office/admin for business operations |
| **Hotel Bills** | ✅ *Conditional* | Allowed if incurred **for business purpose** (e.g., stay during tour arrangement for clients/employees) |
| **Restaurant Bills** | ❌ Not allowed (from July 2011) | Credit on **outdoor catering/food/beverages** specifically **excluded** under Rule 2(l) |
| **Repair & Maintenance** | ✅ Yes | If it relates to office/vehicles/assets used for providing taxable services |
---
## ⚠️ Important Exclusion (Post July 1, 2011):
> **Negative List & Exclusion Clause** in Rule 2(l) states that **"services primarily for personal consumption"** are not eligible.
That means restaurant/hotel bills used for **personal or employee entertainment** would **not qualify**.
---
## ✅ Can You Offset These Inputs Against Output Tax?
Yes — you can **deduct eligible input service tax credit** (telephone, repairs, etc.) from your **output service tax liability** before paying to the government.
> 📌 Provided: You maintain proper **invoices**, **use is for business**, and **services are taxable**.
---
## 🧮 Example:
| Particulars | Amount (₹) |
| ------------------------------------------- | ---------- |
| Output service tax (collected from clients) | 10,000 |
| Eligible input ST credit (telephone, R\&M) | 3,000 |
| **Net tax payable** | **7,000** |
You pay only ₹7,000 to the government and adjust ₹3,000 through CENVAT credit.
---
## 📝 Summary:
| Service | Credit Allowed? | Notes |
| --------------------------------- | --------------- | --------------------------------------------------------- |
| Telephone (business) | ✅ Yes | Fully allowed |
| Hotel (business trip) | ✅\* Partially | Allowed if clearly business-related |
| Restaurant (meals) | ❌ No | Blocked credit |
| Repairs (assets used in business) | ✅ Yes | Allowed if directly or indirectly used in taxable service |
---
Let me know if you’d like a **CENVAT credit ledger format** or help filling the **ST-3 return** with these credits.
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