Input Credit

[Indrajit Mondal]

Dear Sir,

This is a query regarding input credit as I heard some one senior guy who is working also in a construction company in senior position of Account & Taxation.

He said to me we cannot take input credit under RCM on GTA further he also told me that as RCM on GTA calculate on abatement value so you cannot take input credit and he said you take Service Tax Expenses A/c (under P/L a/c) (Dr) instead of Service Tax Input credit A/c (under Current Liability), where as fer my little knowledge I know RCM input can credit against payment of liability direct to Govt.

Sir please reply as now I'm just little confused after hearing the same from the senior guy...

[KASTURI SETHI]

You cannot take credit on material like cement, iron products etc. for providing construction service but you can take credit on input services like ST paid on freight, architect service etc. Can you provide construction service without these input services ?

[Himansu Sekhar]

Credit do not depend upon abatements.

[MUKUND THAKKAR]

Are you paying RCM on GTA for what Inward or out ward ? please Clarify.

[Indrajit Mondal]

Dear Sir,

We will use freight inwards service for cement/steel/sand/stone chips for our various sites.

[Himansu Sekhar]

Input service credit for inward transportation of raw materials available

[Indrajit Mondal]

Thanks Himansu Sir,

Sir can you help me to find out the entry which i mentioned earlier in this post like Service Tax exp instead of Service Tax input as one of senior said to me..

[Himansu Sekhar]

It is to be adjusted against the liabilities. You know what I am going to tell about.

AI Summary

Input service credit: eligible inbound services can be claimed and RCM payments adjust tax liability, not P&L expense.
Input tax credit for construction is not available on input goods like cement and iron, but is available for qualifying input services such as inward freight and architect services. RCM liability for services like GTA does not preclude taking input credit for eligible input services; amounts paid under RCM should be adjusted against service tax liabilities rather than booked as profit-and-loss service tax expense.