Cenvat credit - Works Contract composition

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Sadanand

30 Points Posted on 21 February 2011

Dear Members,

A Ltd is engaged in turnkey contracts and is registered under Works Contract Composition Schme of Service tax and paying 4.12% of Service tax.

A Ltd gets majority of its work done from sub-contractors who are also registered under Works Contract Composition Scheme.

Now the query is :

- Can A Ltd take the cenvat credit of the service tax ( 4.12%) paid on the bills of subcontractors ( who are registered under Composition Scheme) ?

Appreciate if members could share their views or experience.

Thanks and Regards,

Vishwanath

Replies (5)

Pankaj Arora

Learner

3431 Points Posted on 21 February 2011

Yes cenvat credit can taken. Input credit used for providing output service is eligible for cenvat credit.

Nirav Worah

CHARTERED ACCOUNTANT

415 Points Posted on 21 February 2011

Under composition scheme under works contract service cenvat credit can be taken against input services and capital goods and not against inputs. Hence, cenvat credit can be taken on service tax ( 4.12%) paid on the bills of subcontractor.

CA Unnikrishnan Nair N

Chartered Accountant

2114 Points Posted on 22 February 2011

Input service and capital goods are eligible for cenvat. Under given case, cenvat credit of sub-contractor service can be taken.

CA Arindam Dey

Chartered Accountant

126 Points Posted on 22 February 2011

Cenvat Credit on Input material on which VAT has been paid and material used in W.C. cannot be availed. However Cenvat Credit in respect of Capital Goods and Input Services(even if they are provided by a sub-contractor registered under Works Contract Composition Scheme) can be availed.