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

AI Summary

Full Service Tax Credit Claimable Immediately for Capitalized Services; 50% Rule Only Applies to Excise Duty. A discussion on a forum addresses whether full service tax credit can be claimed for services capitalized in the books of accounts and added to the cost of an asset. Two responses clarify that 100% service tax credit is available immediately, despite capitalization. The limitation of claiming only 50% credit in the first year applies solely to excise duty, not service tax. The accounting treatment does not affect the ability to claim full credit, as services cannot be considered capital goods for CENVAT credit purposes.