Credit on AMC contract

[Dhaval Kakkad]

one company raised bill to us with Service tax ( In case of maintenance or repair or reconditioning or restoration or servicing of any goods , pay service tax on 70 percent if value )  plus VAT charges as Gujarat Vat Rules that u can charge on AMC bill 80 percent of Basic Value example below :

Basic Amount of Invoice :                                           Rs. 100=00

Service Tax ( 70 percent of Value ):                                       Rs.     8=65 ( 12.36 percent on 70 percent of Basic Amount )

Total :                                                                            Rs. 108=65

VAT ( Gujarat Vat – 12.50 percent )                                       Rs. 10=00 ( 12.50 percent on 80 percent of Basic Amount – i.e.

                                                                                       100=00  x 80 percent =80  ,  80=00 x 12.50 percent = 10.00

And we cliam tax credit on VAT collected on 80 percent amount ( i.e. Rs.10 in above example) ???

[YAGAY and SUN]

If GVAT allows for availing the Input Tax Credit, then you may avail the Input Tax Credit on such transactions of Rs. 10.00 on AMC.

Team YAGAY & SUN

(Indirect Tax Consultants)

[Sanjeev Tambe]

Actually VAT ITC is allowed on machinery spares. If you have entered in AMC with material then your AmC contractor should raise bill for spares separately. In such situation you can save service tax on the value of spares charged as service tax valuation rule 2(a)(i) clearly says that the value of the goods sold is to be deducted from total contract value and only service portion is to be subjected to service tax.

You should ask your amc contractor to mention cost / value of spares used in providing service separately.

Sanjeev Tambe

[Dhaval Kakkad]

at the rate of pradeep : I want to know that whether GVAT allows the input tax credit or not ?

[MUKUND THAKKAR]

Dear Dhaval,

let  me know on what ground  Gvat not allow  Input Tax credit.?

Mukund Thakkar

AI Summary

Input tax credit eligibility on VAT charged in AMC contracts depends on GVAT provisions; separate spares to claim credit.
ITC under Gujarat VAT may be claimed on the VAT component of AMC invoices if GVAT rules permit. Where AMCs include supply of machinery spares, VAT ITC is normally available on those spares, and service tax valuation rules allow deduction of the value of goods sold from the contract value; contractors should separately itemise spares and their costs to enable the purchaser to claim ITC and to exclude goods value from service tax.