CENVAT CREDIT -HOSPITALS

[rajiv soni]

1. A 250 Bed Hospital in a Metro has taken Service tax Registration .
2. Hospital  is charging Service Tax on entire Bill value wherever Payment is directly being made by Insurance Company.
3. Hospital is charging Service Tax on Executive/Pre recuitment health check up whever direct payment is being made  by corporates.
4. Hospital is constructing a New wing for which it is procuring construction related material and also procuring   Medical Equipments by paying Excise duty/CVD . For construcing the Buiding Hospital is also availing Various Services like architect,structural consultant,civil work,Plumbing etc.
5. For day today operations Hospital is procuring medicines,consumables,medical equipment Laboratory Equipments,office Equipments /Ambulance and other Capital Goods .
6. Hopital is also receving Services like Security Services, Canteen, Telephone,repair and mainenance etc.
7. Is the Hospital eligible for Cenvat Credit on 100 % Excise Duty /CVD wrt to Capital goods.
8. 80% of Billing is for Taxable Services and 20 % for Non Taxable Services.For Inputs material and Services Hospital wants to take proportionate credit for Taxable Services at the end of each month.
9. Based on above scenario is the understanding for taking CENVAT Credit as per point no. 8,9 is correct.Shall be grateful if relevant section is mentioned as well.

Thanks

[DR.MARIAPPAN GOVINDARAJAN]

Dear Sir,

Excise duty can be taken as credit if the capital goods come under the definition of Rule 2(a) of CENVAT Credit Rules, 2004.   Service taxes paid to various activities can be availed if the same are utilised for providing output service and related to the business activities as deflined in Rule 2(l) of the CENVAT Credit Rules, 2004.  If you are able to main separate cost records for taxable services and non taxable services you can avail the credit fully or you may choose option under Rule 6(3) of CENVAT credit Rules, 2004 and pay tax as per the formula and you can avail full credit. 

Regards,

M. GOVINDARAJAN

9486103193

 

[rajiv soni]

would appreciate exhaustive and pointwise reply.

Which are the hospitals which are availing above credits.

[CA Rachit Agarwal]

It seems that you are rending both taxable and non taxable services.

You can avail the cenvat credit on inputs/inputs services and 50% of duty in respect of capital goods in the year of receipt and balance in the following year subject to Rule 6 of Cenvat Credit Rules, 2004.

As per the Rule you have to maintain the separate sets of books of accounts regarding the procurement and utilization of services for taxable and non taxable services. If not then either pay the duty equivalent to 5% of the value of exemted services or pay an amount equivalent of cenvat credit availed on the exempted goods.

 

[Snehal Kulkarni]

 

We think 6% incase of exempted services and 5% in case of exempted goods.

Is It ?

 

[CASeetharaman KC]

Excise Duty cenvat credit can be taken on capital goods, namely 50% in the first year and the balance in subsequent years. The extent of taxable versus non taxable turnover is not of any importance. Either separate records have to be maintained to avail Cenvat credit or 6% to be paid on exempted services and 5% on exempted goods to avail full cenvat

AI Summary

Cenvat credit entitlement: separate records or prescribed payments required to claim full credit for mixed taxable and exempt services.
Hospitals can take CENVAT credit on excise duty/CVD for capital goods that meet the statutory definition and on input services used for taxable output services. Capital goods credit is often availed in a phased manner (portion in year of receipt and balance subsequently). To claim full credit with mixed taxable and exempt outputs, hospitals must maintain separate records segregating usage or follow the prescribed adjustment mechanism and make specified payments where records are not maintained.