Cenvat credit on Part Payment

[Pawan Agarwal]

Respected Seniors,

In number of service contracts mainly related of works contracts services, there can be term of 10% hold from each bill and will be paid after successful commissioning and performance test.

In above case let say a bill of ₹ 100000 plus service tax ₹ 14000, we pay ₹ 104000 to vendor and ₹ 10000 will be on hold. How much cenvat credit we can avail on this payment. What will happen if balance 10% will be paid beyond 12 months of bill date.

AI Summary

Cenvat Credit Eligibility Explained: Withheld Payments Don't Affect Service Provider's Tax Liability; Full Credit Claimable A discussion on a forum addresses the issue of availing Cenvat credit when part of a service contract payment is withheld. A user queries about the credit eligibility if 10% of the payment is held back until successful service completion. Responses clarify that full service tax is payable on the billed amount, and the withholding does not affect the service provider's tax liability. The consensus is that the payer can claim the full Cenvat credit of 14,000, as the service tax is based on the gross billed amount, regardless of the withheld portion.