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

Can You Pay Service Tax on Cash Basis and Claim Cenvat Credit on Accrual? Rule 7 Clarified A participant inquired about the applicability of Rule 7 of the Point of Taxation Rules, specifically whether one can pay service tax on a cash basis if their taxable services were below 50 lakhs the previous year, and still avail input Cenvat credit on an accrual basis. A response clarified that the rules for service tax payment and Cenvat credit are distinct. Paying service tax on a cash basis does not affect the ability to claim Cenvat credit on an accrual basis, provided the conditions of Rule 4(7) of the Cenvat Credit Rules, 2004 are met.