Service tax credit on Input Services

[Asked by Guest]

Sir, 2% of our total receipts attract service tax and balance 98% sales are covered under VAT/CST and on this 98% sales no service tax is payable.Can we take full credit of service tax paid on input services like telephones,CA services, security services etc. for this 2% reciepts.

Thanks and Regds

It is immaterial to proportionate the Service tax paid by you on the 2% percent of your total recepits,full credit of service tax on input services can be taken on your total service tax received.

[A RAVINDRA]

Mr. Harsh is wrong. If you are paying CENVAT then only you can avail 100% input credit. Other wise you have to take proportionaltly. Generally it is 20% of the service tax paid by you on your input services. But if any input service availed by you is exclusively for discharging out put service(to be established propery) then you can avail 100% credit on such exclusive input services.

AI Summary

Service tax credit: full credit depends on CENVAT compliance; otherwise apportion input service credit, exclusives claimable.
Whether full credit of service tax on input services may be availed when only a small portion of receipts attract service tax. Full credit is asserted by one reply, but another clarifies that full input credit is available only with CENVAT compliance; otherwise credit must be proportionately apportioned, while input services used exclusively for the taxable service may be fully claimed if exclusive use is properly established.