Service tax credit - capital goods

[madhavvan n]

in case of services which are capitalised in books of account and they are added to cost of asset whether the credit would entire credit be available or it will be 50% in first year and balance 50% in second year

[GANAPATHY RAJENDRAN]

100% service tax credit can be taken though it is capitalised. The restriction to avail 50% credit is only for Excise duty

[Mukesh Kumar]

You accounting treatment is nothing to do with cenvat credit provisions to teat a particular item as capital goods, inputs or input services. A service received by you can not take the shape of capital goods for the purpose of cenvat credit. You are allowed to avail 100% credit at once.

AI Summary

Service tax credit: full input service credit allowed despite capitalisation; the pro rata restriction applies only to excise duty.
Service tax credit on input services capitalised in the books is recoverable in full; the pro rata restriction that halves credit is confined to excise duty. Accounting capitalisation does not convert an input service into a capital good for cenvat purposes, so full input service credit may be availed at once.