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...

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.