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cenvat of service tax on lease rent of telephone lines

Others 2083 views 3 replies

Dear frns,

During bank audit i observe that bank have not taken credit  of service tax paid on lease rent  of  telephone lines worth Rs. 15,500(approx), the invoices are of the month of april , & may. 2008

now i want to know that whether the benefit is available for bank in the F.Y. 2009-10, for the said 15,500 rs.

i want to make an moc for the said amount by debiting the cenvat receivable amount by Rs. 15500.

 

am i right????

please tell soon

Replies (3)

The credit of input services is available to a service provider. However the provisions of Rule 6 require that only proportionate credit is tobe claimed when taxable and non taxable servcies are provided.

The important question for a bank is whether the interest on lending is a service at all? Consdiering that they also pay interest on deposits. If it is a possible service then only proportinate of total income to taxable income would be available.

Otherwise the full amount. Considering that the amount is only 15.5K a general note in the LFAR and a email to the statutory auditors that this maybe happenning due to lack of knowledge of ST to bankers wcould also suffice.

dear mr.  madhukar

plz tell whether this rule 6 is of Cenvat Credit Rules ??

also tell, as  the bank branch have its seprate service tax No. , the credit is available in which proportion .

 

 

 Not all the activities of a Bank is taxable under service tax. The are taxable as well as nontaxable/exempted services provided banks. Now, the telephone service is definitely a input service for the banks but the problem is it is a common input used to provide both taxable and non taxable/eexmpted  service and in such cases the whole of service tax paid on lease retal of telephone line cannot be availed and they have to adopt method prescribed under Rule 6(3) of CENVAT credit Rules, 2004.


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