Cenvat Credit

[Ranbir Singh]

Sir, we are consulting engineers and using various engineering softwares for providing output service to clients. Please clarify that are softwares covers in the definition of 'capital goods' or not as per the cenvat credit rules? and if not can we eligible to take cenvat credit on softwares or not. Please suggest.

[Sanjeet Kumar]

Dear Ranbir

First of all you has not stated the type/heading/classification of your software.

Secondly softwares are not covered by the meaning of capital goods under rule 2(a). so you can't get the credit of your software as capital item.  

But there is some chances, that you can get the credit of software as input. but you didn't provide the whole information in your query so it is hard to say right now. 

One more suggestion you should hire some consultant on this issue to get right/accurate suggestion.

[PAWAN KUMAR]

In terms of capital goods, cenvat credit will not  allow to you on softwares. However you can claim cenvat credit as inputs for providing the output service as per rule 2 (k).

AI Summary

Engineering Software Not 'Capital Goods' for Cenvat Credit; Possible Input Credit Under Rule 2(k) A consulting engineering firm inquired whether engineering software qualifies as 'capital goods' under Cenvat credit rules, and if not, whether they can claim Cenvat credit on these softwares. Two respondents clarified that software does not fall under 'capital goods' per rule 2(a), thus disqualifying it for credit as a capital item. However, they suggested that the firm might claim Cenvat credit on software as inputs under rule 2(k), although more detailed information is needed. It was recommended to consult a professional for accurate guidance.