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Input service tax

Jaya prakash (Accounts & Finance Executive) (45 Points)

02 February 2016

Dear All,

I have a doubt on Service tax input.

We have two line of Business one is trading another one is Software slaes.
we are taking the service tax input on trading like forward agent and other inputs.
My doubt is we are eligible to take input on trading things to adujest on output software sales.
Reguesting to please guide me on this.

Thanks,

Jaya Prakash B

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7 Replies

Ajit Hegde (CA - Final) (1367 Points)
Replied 03 February 2016

No. Input credit can be taken on oly related input services

Madhukar N Hiregange (Chartered Accountant) (38934 Points)
Replied 03 February 2016

It is important to first finalise that you are paying the due taxes asper law. At times ST + VAT is being demanded on the same transaction, due to lack of clarity in tax legislations of centre and State.

If ST is payable only on the services then the input services credit incurred on trading where ST is not paid would not be eligible for credit.

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Ajay Chandramouli (Article Assistant ) (334 Points)
Replied 03 February 2016

Dear Mr.Prakash

Input can be claimed only on such related items that are used to provide a taxable service.

Input cannot be claimed on items which are used to provide exempted service.

Here trading is a exempted service and hence cannot avail input

Jaya prakash (Accounts & Finance Executive) (45 Points)
Replied 03 February 2016

Dear Sir,

Thank you for sharing the inputs on this matter.

I am explained detailed transactions how we are doing the business in bangalore.

we are importing the 3D printers from HongKong and we are selling in indaia for that we are charging the Vat to customers.
For importing we are paying the customs clearance charges to one client he is charging the service tax and we are taking the input on this.
we are buying the software from x client in India we are selling the same to indian clients we are charging the service tax on this adjusting with inputs.
My doubt is we can take the inputs on customs and clearance charges but is not at all related to software services.
please clarify with any notification on this. we are taking inputs on customes clearance nearly 2L per month.
I have informed to my Boss on this we are not eligible to take input because it is not related to any final product. But he is telling we are doing for this last 5 years no body question on this like that he is telling.
Due to this i am checking with you sir.

Thanks,

Jaya Prakash B

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kedareswari artham (Chartered Accountant) (34 Points)
Replied 03 February 2016

Dear Mr Jayaprakash services which are exclusively used in trading activity are ineligible for availment of Cenvat credit. Cenvat on Services which are commonly used for both provision of trading and output services are eligible for proportionate credit and Cenvat on Services which are exclusively used in provision of output service are fully eligible for avaailment of Cenvat credit. Pls refer rule 6 of Cenvat Credit Rules, 2004