Cenvat availibility on software purchases

[Santosh Mali]

Cenvat credit on purchases of software for following purpose is eligible?

1) Machines controlled by computer programming

2) Operating systems installed On PC (used by departments like HR, Accounts, Administration, PPC, Dispatch, Stores and others)

3) ERP system installed on PC on above mentioned departments

Please guide

Santosh M.

[YAGAY andSUN]

Dear Sanjay,

There is no doubt about availability of CENVAT credit pertaining to your query mentioned in the point no. 1.

On remaining point no. 2 and 3 you may avail the CENVAT credit if in relation to manufacture or provision of taxable goods/services, modernization or repairs of factory or office, storage, quality control, recruitment, accounts, audit, sales promotion, procurement of inputs, legal services, financing, computer networking. Sometimes, department may raise irrational objections on such availment of CENVAT credit. So be cautious.

Regards,

YAGAY and SUN

(Management and Indirect Tax Consultants)

[Arun Kumar Singh]

If you are providing any taxable services or manufacturing of goods and paying duty on that products then you can avail the cenvat credit and utilize the same.

[Mahir S]

Credit may be available under the heading of "Computer Networking" as defined in the definition of input service. Please check the availability under the said heading.

AI Summary

Cenvat credit eligibility on software: machine-control software allowed; OS and ERP allowed with nexus to taxable activity. Availability of CENVAT credit is recognised for software that directly controls machines. Operating systems and ERP software may qualify for credit only where there is a demonstrable nexus to manufacture of goods or provision of taxable services or connection to specified input-service activities (including modernization, repairs, storage, quality control, recruitment, accounts, audit, sales promotion, procurement, legal services, financing, and computer networking). Classification under the input-service head Computer Networking may apply; maintain supporting documentation to meet possible departmental objections.