Service tax credit on mobile phones

[Guest]

Our client has taken mobile phone connections for its employees under corporate connection policy. The bills are in the name of the employee. Our client is bearing mobile phone charges. Can our client claim Cenvat Credit in respect of service tax paid on mobile phone charges?

[Surender Gupta]

As per the provisions of rule 2(l) of the Cenvat Credit Rules, 2004, any input service which is used to provide output service is eligible for Cenvat Credit. Therefore, the heavy onus is on the company to prove that the mobile phone provided to its employees are for the purpose of its business and used for providing output service.

[Madhukar N Hiregange]

This is a common practice and my view is that credit may not be deniable of the same is used for pofficial purposes. It maybe wise to avail the credit after a deduction for personal use ( say 10-30%) depending on the personal use on approxiate basis.

AI Summary

Claiming Cenvat Credit on Corporate Mobile Charges: Deduct Personal Use to Comply with Cenvat Credit Rules, 2004. A client inquired about claiming Cenvat Credit on service tax paid for mobile phone charges under a corporate connection policy, where bills are in employees' names but costs are borne by the company. One respondent highlighted that under Cenvat Credit Rules, 2004, input services used for providing output services are eligible for credit, placing the burden on the company to prove business use. Another respondent suggested that claiming credit is common if used for official purposes, recommending a deduction for personal use, typically ranging from 10-30%, to ensure compliance.