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) ???

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.