Service tax reverse charge mechanism input credit or refund

If you are engaged in providing any other taxable service in which there is output service tax liability then payment of service tax under reverse charge can be adjusted with such service tax liabilty.

In case not engaged in providing taxable service then it cannot be adjusted & refund is also not availble.

Credit of Service Tax paid under RCM is available on Bill Booking Basis or payment basis

Under reverse charge mechanism credit for service tax paid on Input Services can be availed at the time of PAYMENT. So, when service is received

Expense  A/c   Dr

    To Creditor  A/c

    To Service Tax payable under reverse charge A/c  

When the service tax is paid

Service Tax payable under RCM   A/c   Dr

    To Bank A/c

Availing CENVAT Credit

Input Service Tax (CENVAT)  A/c   Dr

  To Expense A/c

You may claim credit of input service tax immediately after the payment under RCM. How if you are providing output service then you claim refund under Rule 5B of CCR read with N/N.12/2014 only in case of following services:

1.  renting of a motor vehicle designed to carry passengers on non-abated value, to any person who is not engaged in a similar business;

2.supply of manpower for any purpose or securiy servtices; or

3. service portion in the execution of works contract -