Service tax - my special series for IPCC/ final students (3)

SANYAM ARORA (“It's hard to beat a person who never gives up.”)   (20158 Points)

16 September 2011  

A Very good evening to all the members of cci family. It gives me immense pleasure to introduce the third part of my series.

In the last part of my series we discussed regarding CENVAT CREDIT and in this part we will discuss about INPUT SERVICES, Some basic points , etc.

So lets go for it my friends -

 Input Services -

For Manufacturer -

Any service used, whether directly or indirectly, in or in relation to the maufacture o final products up to the place of removal.

For a Service provider -

Any service used by a provider of taxable service to provide output service.

 The definition further includes services:



used for setting up, modernisation, renovation, or repairs of premises,
advertisement, sales promotion, market research
activities relating to business such as accounting, auditing, financing, etc.

Input services - Condition for Availment of credit - 

 Cenvat credit shall be allowed on or after the day on which payment is made towards –
value of input service; and
Service tax payable on the same
The input service (s) should be used for providing output service or for manufacturing final product
Input services used exclusively for providing/ manufacturing of non taxable services/ goods - no credit shall be available
Input services used for providing/ manufacturing both taxable & non-taxable services/ goods (including trading activity) – partial credit would be available by opting any of the three prescribed methods (discussed later)

Issuance of invoice, bills, challans and other documents -

As per provisions of rule 4A and 4B, every service provider is required to issue a document within 14 days from either the date of completion of service or eceipt of any service charge. such document should be serially numbered and should contain the name, adress of the provider as well as receiver of service.

Some important points to be remebered -

(a) The provisions of the service tax applies to whole of india except state of jammu & kashmir.

(b) Service tax will be applicable even if the services are rendered outside Indian territorial waters.

(c) Advances received are taxable in full w.e.f 16-6-2005.

(d) General exemptions -

- Service provided to UNO or international Organization.

- As per notification no. 17 / 2011 if the services provided are wholly consumed for authorized operations within SEZ, the provider of service is not liable to pay service tax.

Tax payable by receipient of service -

Import of services
Goods Transport Agency Services
Sponsorship Services
Insurance Auxiliary Services  
Thanks & Regards
Sanyam Arora