Asst. Manager Accts & Fin.
402 Points
Posted on 21 January 2013
What it basically is saying is that you have maintain seperate books of accounts for your service rendering business & trading business. Further all those services for which you want to avail CENVAT Credit should be entered & recorded as expenses for service business. If you are using Tally then make 2 books of accounts (Company) in your software. XYZ co P. Ltd. (Trading) & XYZ co P. Ltd. (Service).
Point Number 5 States that if you dont maintain seperate books of accounts then you can take only 35% of output Service tax as CENVAT Credit e.i.
say you have to pay Rs. 100/- as service tax, but CENVAT credit balance with u is say Rs./-, You can only avail Rs. /- as CENVAT credit, the rest will be waisted and you will have to pay Rs. 65/- instead of Rs.40/-
Extract for your reffrence....
The Service Tax Credit Rules, 2002 Service Tax Credit Rules, 2002 (As on 09.07.2004)
(4) Where a service provider avails credit on any input service and renders such output services which are chargeable to service tax as well as exempted services or non taxable services, as the case may be, then the service provider shall maintain separate accounts for receipt and consumption of input service meant for consumption in relation to rendering of output services which are chargeable to service tax and the inputs service meant for consumption in relation to rendering of output services which are exempted services or non-taxable services, as the case may be. The service provider shall take credit only on that portion of input service, which is intended for use in relation to rendering output services, which are chargeable to service tax.
(5) In case the service provider, opts not to maintain separate accounts of input service meant for consumption in relation to rendering of such output services which are chargeable to service tax as well as exempted services or non-taxable services, he shall be allowed to utilize service tax credit for payment of service tax on any output service only to the extent of an amount not exceeding thirty-five per cent. of the amount of service tax payable on such output service.
(6) Service tax credit on the service provided in relation to telephone connection shall be allowed only in respect of such telephone connections which are installed in the premises from where output service is provided.
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