Service tax credit

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Anand Manpuria

Manager

22 Points Posted on 13 September 2011

PLease provide me the answer to the below mentioned queri urgently here or on my mail id - manpuria_anand @ rediffmail.com

As per my Knowledge on service tax,

Service tax credit can be utilised only by Service recipient and as such the burden of service tax to be borne by service recipient only .

Service Provider collects the service tax from service recipient and pays the same to the Government.

There is an exception in case of Mutual fund distributors (Service Provider). In such case the service tax is directly paid by AMC/ Mutual Fund house (Service Recipient) to the government instead of paying to service provider, who in turn deposits it with the govt. for the credit of service recipient.

Now if a Mutual Fund Distributor provides the service to some other person then can they take a credit of service tax paid by the AMC directly.

Replies (2)

CA Unnikrishnan Nair N

Chartered Accountant

2114 Points Posted on 14 September 2011

No. It is an input service only in the hands of the AMC. Hence others cannot take credit of it.

CA Prabhat Gupta

Manager (Indirect Taxes)

644 Points Posted on 14 September 2011

Though I could not find any specific provisions for the same in Service Tax Rules or CENVAT Credit Rules, I am also of the opinion that Only AMC can take the credit of Service Tax Paid.

The case relates to payment of Service Tax on reverse charge basis as contained in Rule 2 (1) (d) of Service Tax Rules, 1994. These doubts have been clarified in case of GTA, where the Service Recepient is allowed credit of service tax paid by them, provided the Service comes under the ambit of input services. Applying the same here it could be said that AMC being the service Recepient is eligible for the credit of Service Tax paid.