Time of availment of Credit

This query is : Resolved

Ajay Gumbar (Querist)
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03 April 2008 Hi,

The Cenvat Credit of Input Services can be availed only at the time of payment of the value of input service is made.

Query - At what time such 'Payment' is considered to be made. Is it
a) when the cheque is handed over to the vendor, or
b) when the amount is debited in the bank account, or
c) when the payment is recorded in the books of accounts or,
d) any other time ( please specify)

Please quote your answeron the basis of relevant rule/notification/clarification/judgement etc and NOT ON THE BASIS OF GENERAL LOGIC.

Regards,

Ajay Gumbar

Shyam Lal Naik

Shyam Lal Naik (Expert)
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03 April 2008 Dear Mr. Gumbar,

I don't think there is any specific rule... etc.

Sanjeev Kumar Sharma

Sanjeev Kumar Sharma (Expert)
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03 April 2008 when the cheque is handed over to vendor, at present i donot remember the specific section/rule or whatever it is

Ajay Gumbar

Ajay Gumbar (Querist)
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03 April 2008 Still unresolved ???

Any body with a view???!!!

Ajay

Dayal

Dayal (Expert)
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03 April 2008 Well a very minute observation, good one.

If you are sure about the funds availability in your books you can go by the payment, the moment cheque is handed over to the vendor.

But on principal grounds, the credit eligibility will only be when the amount has been debited in the bank account.

Reason being, there would be possibilities of booking your expense and releasing the cheque on the last day of the financial year, which would be very high in term of value, and this will allow you to take the credit thereby causing loss of revenue to the government, as such paid means actual debit in bank.

Do not go by the vague defination of paid, paid in actual terms would be amount received by the vendor/ service provider

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