Service tax

Queries 592 views 4 replies

jayesh shah

service

69 Points Joined July 2008

HI,

WE ARE PAYING SERVICE TAX ON IMPORT OF SERVICES UNDER REVERSE CHARGES MECH. SO CAN I CLAIM THE SAME AS CENVAT CREDIT OR NOT.

I WANT KNOW, WHERE I SHOULD SHOW THE SERVICE TAX PAID ON IMPORT OF SERVICES IN SERVICE TAX RETURN

UNDER PART-D SERVICE TAX PAID

D1 - IN CASH OR

D2 - BY CENVAT CREDIT.

FOR EXAMPLE I HAVE TO PAY RS.5000/- SERVICE TAX ON SALE & 2500/- SERVICE TAX ON IMPORT OF SERVICE

AND I HAVE CENVAT CREDIT OF 1000/- ON LOCAL SERVICES TAKEN BY ME.

1) SO TOTAL SERVICE TAX PAYABLE 5,000 + 2500 -1000 = 6,500/-

2) FIRST OF ALL I AM PAYING 2500/- S.TAX ON IMPORT OF SERVICE & TAKE CENVAT CREDIT OF THE SAME IN SAME QUARTER.

SO NOW BALANCE S.TAX PAYABLE IS 5,000/- - 1,000/- - 2,500/- = 1,500/-

SO TOTAL SERVICE TAX PAYABLE IS 2500+1500 = 4,000/-.

I DONT KNOW WHICH ONE IS CORRECT.

PLEASE HELP

THANKS IN ADVANCE

JAYESH

Replies (4)

Ravi Kumar Somani

Indirect Taxes Specialization

3893 Points Joined April 2009

Firstly, CENVAT credit cannot be taken for payment of ST under reverse charge, it has to be mandatorily paid by cash. Once it is clear that it is mandatorily required to be paid by cash it needs to be disclosed in payment by cash field in returns.

CMA Poornima Madhava

CMA

13117 Points Joined May 2009

Yes, I agree with Ravi:

First you need to pay ST on RCM (Rs.2500) by cash (this is to be shown in the return under ST paid as Service Receiver under Reverse charge)
Show other liability of Rs.5000 (as service provider in return) and adjust cenvat credit of Rs.1000 and then adjust the tax paid under RCM (please make sure you take credit of ST paid under RCM after the date of payment of tax to govt)
So final liability will be Rs.1500 (5000-1000-2500)

sreenivas

student

46 Points Joined February 2013

Firstly utilize cenvat of 1000 while paying 5000,ie, pay only 4000. Pay whole 2500 by cash,then utilize the credit of 2500 in the next quarter.

Madhukar N Hiregange

Chartered Accountant

39039 Points Joined September 2008

If you discharge the service tax on reverse charge in the month of billing, then the credit canbe taken in the next month. Pay in cash in end of pr month and avail the credit in the next month. If amount is large this can make a differecne in saving in intenrest costs.