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Service Tax Credit on Building Material

Gargi Ranade (CS) (619 Points)

29 March 2011

Dear All,

We are in the process of construction of new plant , in our factory premises.

I just want to know , can we avail Service tax , Excise Duty , Vat credit on the inputs bought for this construction work.

Kindly let me klnow the sections under which I can avail this credit.

Thanks in advance.

Regards,

Gargi

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4 Replies

Pankaj Arora (Learner) (3134 Points)
Replied 29 March 2011

you can not take input credit of service tax or ED for building materials.

Pinky Agarwal (Chartered Accountant) (426 Points)
Replied 04 April 2011

As per my understanding, If you are taking abatement under construction service then the credit will not be available to you and if you are paying tax on full value then credit of the same will be available to you..

Regards,

Pinky Agarwal.

HS Negi (Senior Executive- F&A) (590 Points)
Replied 04 April 2011

As per Rule 2(l)2 of CCR,2004, Input credit of service tax & ED will not be available to you.

Regards

HS Negi

Pinky Agarwal (Chartered Accountant) (426 Points)
Replied 05 April 2011

As per current definition of input service, credit will not be available to you..

(l) “input service” means any service, -

(i) used by a provider of taxable service for providing an output service; or

(ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal,

and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; but excludes services,-

(A) specified in sub-clauses (p), (zn), (zzl), (zzm), (zzq), (zzzh) and (zzzza) of clause (105) of section 65 of the Finance Act (hereinafter referred as specified services), in so far as they are used for-

(a) construction of a building or a civil structure or a part thereof; or

(b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; or

(B) specified in sub-clauses (d), (o), (zo) and (zzzzj) of clause (105) of section 65 of the Finance Act, in so far as they relate to a motor vehicle except when used for the provision of taxable services for which the credit on motor vehicle is available as capital goods; or

(C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;