eligibility of service tax credit

[Ramakrishnan Seshadri]

Dear Sir,

We had a doubt relating to the eligibility of service tax credit. We are the manufacturers of automobile parts.

We receive service tax paid invoices on services like manpower,clearing & forwarding and some other services. Our question is whether we can take service tax credit on receipt of the invoice and booked in the system or we have to wait till the payment is made for the invoices. we are still in confusion. some say only after payment service tax credit is eligible. Not at the time of booking the invoices .

Experts please clarify our doubt

Thanks & Regard,

S.Ramakrishnan

.

AI Summary

Auto Parts Manufacturer Queries Service Tax Credit Timing; Rule 4(7) Clarifies Invoice Receipt Eligibility, Payment Reversal Conditions A manufacturer of automobile parts inquired about the eligibility of service tax credit, specifically whether it can be claimed upon receiving and booking invoices or only after payment is made. An expert clarified that under Rule 4(7), CENVAT credit on input services is allowed upon receiving the invoice. However, if payment is not made within three months, the credit must be reversed. Credit can be reclaimed if payment is made after reversal. For reverse charge mechanisms, credit is allowed only after paying service tax to the government. Additional replies endorsed this explanation, confirming the detailed guidance provided.