Service tax credit after availing abatement

[Guest]

We are paying service tax ON GTA services after availment of 75 % abatement. My question is whether we can avail exemption service tax on above upto 20 % from taking Credit Service tax on telephone, Advt. or other items. ? Manoj

[Surender Gupta]

No cenvat credit where the service tax is paid after availing partial exemption under notification no. 1/2006 ST dated 1-3-2006. Therefore, you can not avail the benefit of Cenvat Credit upto 20% to telephone, adv. or other items.

AI Summary

Cenvat credit restriction after abatement bars claiming input credits for ancillary services on abated GTA service. When service tax on GTA services is paid after availing an abatement, Cenvat credit on inputs and input services is not available for the residual taxable portion; taxpayers paying tax on an abated value cannot set off credits for ancillary items such as telephone, advertising or other input services.