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Cenvat credit on reverse charge mechanism

nitin (M.Com) (100 Points)

22 July 2013

Dear All,

we are service receiver, we are paying 75% service tax payment.

now my Question is can we get cenvat credit on 25%.?

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17 Replies

CA Sandeep Soni (Chartered Accountant) (55 Points)
Replied 22 July 2013

Please clearely mentioned facts in brief, so that we can reply properly.

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abhishek (CA FINAL) (274 Points)
Replied 22 July 2013

I dont think you can get CENVAT CREDIT for 25% since the service provider will avail that.

CA Kunal Mishra (Consultancy Service) (172 Points)
Replied 22 July 2013

Yes u can take credit of 25%,as that 25% will also be recovered from you by service provider. Cenvat of 75% is available after payment & for 25% on invoice basis. Hope so ur doubt wil b clear.

satya (Executive Excise) (1839 Points)
Replied 22 July 2013

Dear Nitin,

Cenvat Credit of Service Tax under RCM is eligible ;

Provider part of Service Tax is on the strength of Service Invoice/Service Bill.

Receiver part of Service tax is on the strength of GAR-7 Payment Challan.

1 Like

nitin (M.Com) (100 Points)
Replied 22 July 2013

To,

CA sandeep soni,

Our vendor is suppling manpower to our company. Manpower supplier is Individual & service receiver is

Company.

as per reverse charge machanism

service provide has to pay service tax 25%

service receiver has to pay service tax 75% .

so service receiver can get cenvat credit? if yes what is %.

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Rahul Kwatra (DM Finance & Accounts) (21 Points)
Replied 22 July 2013

Dear Nitin.. Ur query is already resloved by Mr. Sathya.. which states that 100% of Cenvat can be availed by the service reciever company, despite 75% paid under reverse charge & 25% paid via Sr. provider.

nitin (M.Com) (100 Points)
Replied 22 July 2013

Thank sir for giving reply

CA Sandeep Soni (Chartered Accountant) (55 Points)
Replied 22 July 2013

As per entry No.8 in notification 30/2012 ST, dated 20-06-2012, the service tax to the extent of 75% is payable by recipient of service & balance 25% is provider of service.

Your liability to pay ST is to the extent of 75%, so accordingly you will get Cenvat credit of 75% only irrespective whether SP charged ST or not or pay 25% ST or not (he may be SSP covered under ST exemption limit).

You will get cenvat credit to the extent of 75% only.

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Ganeshbabu K (Audit and Tax Advisory) (48564 Points)
Replied 22 July 2013

1)25% of cenvat credit can be taken as per invoice

2)75% of cenvat can be taken at the time of payment of service tax using GAR7

means total 100% can be taken provided it is eligible input.

rcm is only mode of collection of service tax you can get cenvat as before with no change but it deferes say 25% and 75%

Sachin (sachinsahdev@gmail.com) (51 Points)
Replied 23 July 2013

Hi, The percentage of service tax covered under RCM I.e. payment directly to govt. the cenvat credit in such case will depend upon the % of payment made to vendor and Service tax authority. However, if not paid to vendor within 6 months, the service tax amount had to be paid with interest and no credit will be available on this amt unless balance is paid to vendor. The rest % will be covered under accrual method and credit can be utilised till 90 days if payment not made to vendor.

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CA S.IBRAHIM (Excise Service Tax And Income Tax) (77 Points)
Replied 23 July 2013

You can get 100% credit but one more thing I will add that the 25% credit will allowed only when u make payment for bill of manpower in 90 days. U must Provo to dept that u have made d pmt in 90 days at d time of departmental audit

CA vinod (Chartered Accountant) (518 Points)
Replied 23 July 2013

yes, you can get the Cenvat credit for the 75% if you paid by challan,

Anil Singla (Accountat) (22 Points)
Replied 23 July 2013

you may take the credit of all the service tax which is charged from you or paid by you under rcm.

Paresh Savla (Accountant) (22 Points)
Replied 14 August 2013

Dear Sir

Our company is registered under Clearing & Forwarding Agency as we sale Products on behalf of Manufacturer & earn Commission. For this Sale distribution we use Service of a local transporter who is individual and distributes only our products on basis of our Bills. (no consignment note issued) And on month end he produces bill for that transport. my question is

1. Whether we are liable to pay service tax under RCM.

2. Whether we can take abatement @ 75% if we are liable to pay under RCM or we have to pay @ 100%.

3. Whether we can take Credit of the the Service Tax payment paid as above (25% or 100%).