Service tax credit on Bank Charges

[Asked by Guest]

Dear Sir,

When we payment made for import by bank. Bank charge to us commission for this bank issue a Debit Advice for import advance remittance and charge Service tax in this advice, Second this this advice is in the Name of H.O but import payment made for Plant and material also received in plant and accounting made in plant. So is this eligible for input Service credit in plant or not ?

Regards

Swapneswar

[Rajagopalan Ranganathan]

Sir,

Since the service tax is paid by your HO credit of the service tax paid can be distributed by your HO under rule 7 of Cenvat Credit Rules, 2004 provided your HO is registered as input service distributor.

[YAGAY and SUN]

Dear Swapneswar,

Such services have been incorporated in the definition of Input Services in the CENVAT credit Ruels,2004 as amended from time to time. As suggested by Rajagopalan Ranganathan sir you may distribute it as per the Rule 7 ibid.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Ganeshan Kalyani]

I agree with both the experts.

AI Summary

Input service distribution: credit for bank charges can be allocated to a plant when the head office is an Input Service Distributor.
Credit of service tax paid on bank charges debited to the head office can be distributed to a plant if the head office is registered and operates as an Input Service Distributor under the Cenvat credit framework; bank charges are treated as input services and the head office should follow the prescribed distribution procedure to allocate the credit to the plant that received the service benefit.