Service tax credit availability after claiming depreciation

[Rishi Raj]

All expenditure related with one business premise was capitalised in the year 2009-10 including the input service tax components on expenses ike architect fees, project management consultancy etc which could be taken as cenvat credit. Business has also claimed depreciation for the year 2009-10.

Is it possible to reverse the capitalization to the extent service tax on input service is concerned and take cenvat credit? Is there any time limit? What is the best way out to get these cenvat credit? By anyway from 1st April 2011, input service tax credit is not available on construction of building etc.

 

 

[CA Rachit Agarwal]

There is no time limit for availing the Cenvat Credit.

You have to show the Service Tax on Input Services  as deduction to the fixed assets schedule of the Financial Statement.

Further dedution to be shown in the depreciation calcuation under Income Tax Act.

After doing above, Cenvat Credit can be availed. However with the subsequent amendment made in the Finance Act, 2011, Cenvat Credit on inputs related to labour charges used for the construction not be available.

 

AI Summary

Cenvat credit can be claimed after capitalisation if service tax is deducted from fixed assets and depreciation adjusted. Cenvat Credit on input service tax paid on capitalised expenditures can be availed by showing the service tax as a deduction to the fixed assets schedule and reflecting that deduction in the depreciation calculation under the Income Tax Act; there is no time limit for availing the credit. However, an amendment bars Cenvat Credit on inputs attributable to labour charges used for construction.