Service tax input credit on abatement

[Naveen Sharma]

Dear sir,

i am working with rent-a-cab service provider company, we are claiming abatement of 60% and charging 40% of service tax from client (Individual or company), we are also receiving services from another rent-a-cab service provider who is also claiming abatement, can we take input credit of such service received against output service.

thanx in advance for quick response.

[KASTURI SETHI]

Input service credit is allowed under Notification No.8/14-ST dated 11.7.14 amending original notification no.26/12-ST dated 20.6.12. You will have to be careful. Read the conditions laid down under Notification No.8/14-ST

[Rajagopalan Ranganathan]

Sir,

Sl. No. 9A of Notification No. 26/2012-ST dated 20.6.2012 as amended lays down that " CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004 for availing 40% abatement. since you are paying service tax on 40% of the gross value charged by you you are not eligible to avail credit of duty/service tax paid on inputs, capital goods and input services.

[Ganeshan Kalyani]

I agree with the views of Sri Kasturi Sir. The input cenvat credit is eligible subject to condition as enumerated in the mega exemption notification no. 26/2012-ST as updated from time to time. Thanks.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

Yes, Sir. I lay emphasis on Notification No.8/14-ST.

AI Summary

CENVAT credit entitlement for abated rent-a-cab services: input credit may be restricted unless notification conditions are satisfied.
Whether a rent-a-cab provider may claim CENVAT credit for input services received from another abated provider depends on the exemption and notification conditions: one amending notification permits input service credit subject to specified conditions, whereas the exemption provision bars credit where abatement on the gross value is availed. Credit availability therefore requires strict compliance with the conditions in the exemption/notification framework.