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

Software classification: not capital goods; eligible as input for cenvat credit for output services under rule 2(k).
Software used by consulting engineers is not covered by the definition of capital goods and thus cannot be taken as a capital item for cenvat credit. However, software used in providing output services may be claimed as an input for cenvat credit, subject to its precise classification and factual use, so further factual detail or professional advice is recommended to determine entitlement.