TaxTMI 
TaxTMI 
We are rendering commercial and industrial construction services. Out of 10 contracts, in respect of 6 contracts service tax is paid on 100% value. In respect of 4 contracts, we avail 67% abatement (based on notification 01/2006). What are the restrictions on availing input credit from 01/03/2006?. Please explain in detail as to whether we should avail only the credits which are directly identifiable in respect of 6 contracts or we should avail input credit on a pro rata basis.
Provisions for availing Input credit
14 Sep 2006 
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Input credit eligibility guides allocation between fully taxable and abated construction services, requiring records or costing for apportionment.
Availability of input credit after 01/03/2006 depends on whether service tax is paid in full or abatement is availed. Full credit is claimable for capital goods, inputs and input services used for fully taxed contracts with documentary proof. Items used exclusively for abated or exempt services are ineligible. Commonly used items require differentiation: certain specified common categories may receive full credit, while other common items must be apportioned and supported by records or costing certificates to claim credit only to the extent of use for taxable services. (AI Summary)
Availability of input credit after 01/03/2006 depends on whether service tax is paid in full or abatement is availed. Full credit is claimable for capital goods, inputs and input services used for fully taxed contracts with documentary proof. Items used exclusively for abated or exempt services are ineligible. Commonly used items require differentiation: certain specified common categories may receive full credit, while other common items must be apportioned and supported by records or costing certificates to claim credit only to the extent of use for taxable services. (AI Summary)