CENVAT CREDIT

[YOGENDRA CHAUHAN]

Dear All,

I as per new ammendment, service tax is payable on accurial basis.

Please confirm me can I enjoy the cenvat credit on accurial basis also.

( As I have not paid any amount to my service provider, but have booked the bill & he is liable to pay service tax as per the new ammendment.)

Will My company will be responsable if we take cenvate credit &  our service provider has not paid the tax timely.

Plese help me........

[YAGAY andSUN]

Yes, you can enjoy the CENVAT credit of input services of Service Tax on accrual basis. In this regard the bill, invoice or challan so issued by the service provider must be paid with in three month.

Further, if the service provider do not pay the service tax to the Government despite of making payments to them, in this situation you need not to reverse the CENVAT credit so availed but Department may ask you to reverse the same.

[Vijay kumar]

Yes. you can avail credit on accrual basis in terms of Rule 4(7) of the Cenvat Credit Rule, 2004 immediately on receipt of the invoice/bill from the service provider. however, if the bill amount and s.tax indicated therein are not paid to the service provider within three months from the date of taking credit, the credit taken has to be reversed, which can be taken later after payment of the said amounts to the service provider

AI Summary

Accrual-based CENVAT credit: avail on invoice receipt but reverse if payment not made within three months. CENVAT credit on input services may be availed on an accrual basis on receipt of the service provider's invoice, but the credit must be reversed if the invoice and tax are not paid to the service provider within three months; departmental authorities may require reversal if the service provider fails to remit tax, and reversed credit can be reclaimed after payment is made to the provider.