POINT OF TAXATION

[RAHUL MALHOTRA]

Hi

My question is regarding Rule 7 of Pot Rules. As per amended Rule 7 if in previous year quantum taxable services were less than 50lacs than one can pay service tax liability on cash basis irrespective of service provided. Now my question is if I am paying service tax on cash basis, could I take benefit of input  cenvat credit on accrual basis??

Regards

Rahul

09810267888

[Rama Krishana]

The provisions regarding payment of duty on service tax and the provisions for availing cenvat credit are two differnt set of rules. The option to pay service tax on cash basis instead of accural basis has nothing to do with the matter in which cenvat credit is availed as per rule 4(7) of Cenvat Credit Rule, 2004. You may continue to avail cenvat credit on accrual basis as long as you satisfy the conditions of rule 4(7) of CCR.

[RAHUL MALHOTRA]

Thanks

AI Summary

Payment basis choice: cash-basis service tax payment does not preclude claiming cenvat credit on accrual basis. The payment-basis election for service tax is independent from the rules governing input cenvat credit; choosing to pay service tax on a cash basis does not prevent a taxpayer from availing cenvat credit on an accrual basis, provided the taxpayer satisfies the statutory eligibility and procedural conditions for claiming cenvat credit.