Service tax calculation

If the assesse is the service proivder/Manufaturer/Manufacturer service provider, then you can take credit of all service tax which you have paid for all input services. 

service tax payable for "providing taxable output services" are 5000/-

you are availing input credit for "input services" 2000/-

so the balance of 3000/- is payable in cash.

Note:

1)reverse mechanism service tax liability can not be set off with input credit, but payable in cash only , example GTA service tax.

2) Input credit is available on only "input services" which are used directly in providing "taxable output services" / "taxable excisable goods clearance"

3) if the assessee has availed any value based exemption / abatement either in service tax or in excise, then no input credit admissible.