TIME LIMIT FOR CENVAT CREDIT UNDER RCM

[Ramachandran Chandru]

Per CENVAT Rule 2004, time limit for taking credit is one year from the the date on which the Invoice is received from the Supplier. Whether this one year time limit for taking CENVAT credit is applicable for tax paid under reverse charge mechanism also.

AI Summary

Debate on Starting Point for One-Year CENVAT Credit Limit Under RCM; Rule 4(7) CCR 2004 Cited. A discussion on the applicability of the one-year time limit for taking CENVAT credit under the reverse charge mechanism (RCM) reveals differing opinions. Some participants argue that the one-year limit should start from the date of service tax payment under RCM, as no invoice is issued. Others cite Rule 4(7) of CCR 2004, which suggests the one-year period begins from the tax payment date. Additionally, if service tax is paid under RCM but the provider is not paid within three months, the credit must be reversed, although it can be reclaimed once payment is made.