Rule 6(3) implications

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Smehta

CA Practice

50 Points Posted on 04 June 2008

1)whether a trader in computer hardware and also providing computer repairs services can avail cenvat credit on input services (other than mentioned in rule 6(5)i.e.100% items)w.e.f.1/4/08 ?
In other words whether trading turnover will be considered in 'exempted' services turnover in the fomulae?(i.e. whether it will form of 'denominator' & numerator)

OR he will have to pay 8% on trading turnover value?

OR he will have to follow prescribed formulae for availing cenvat credit on input services?

2)Similarly whether income on interest on advances recd. by a co-op. bank will constitute 'turnover' for new rule 6 (3) provisions?whether it is to be clubbed under 'exempted' services turnover?

Replies (2)

Ajay Gumbar

Chartered Accountant

228 Points Posted on 04 June 2008

Trading shall not be considered as exempted service in the new rule 6(3). The basic requirement for applying 6(3) is that the assessee is providing taxable as well as non taxable service. The non taxable service includes exempted service also. Since trading is not a service (obviously), this rule does not apply to it .

Smehta

CA Practice

50 Points Posted on 05 June 2008

Dear Sir,

Thanks for the reply.You have given reply on clause (2) of the query with respect to treatment of 'interest recd. by banks on advances given to customers'.

Pl. clarify.