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Service tax credit utilization

akshay naik (ARTICLES) (32 Points)

03 January 2017

whether Service tax credit is to be taken only after payment of bill?

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Rahul Shah (Assistant Chartered Accountant) (196 Points)
Replied 03 January 2017

Input Services

Rule 4(7) provides for taking credit of service tax in respect of input services. The CENVAT credit in respect of input service shall be allowed, on or after the day on which the invoice, bill or, as the case may be, challan referred to in rule 9 is received. If the credit is availed on or after the day on which the invoice is received, the payment in respect of the invoice shall be paid within three months from the date of invoice. Otherwise the credit already taken is to be reversed.

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prasad_1905 (Chartered Accountant) (57 Points)
Replied 03 January 2017

adding to the reply of Rahul shah, in case of reverse charge services, you are eligible for credit only on payment of tax to the government.

for forward charge obviously there is no time limit for taking recredit of credit reversed earlier.

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