Service Tax on reverse charge method - reg.

[vinay wakde]

Our company is member of Sponge Iron Manufacturers Association(SIMA), New Delhi.  During this month we have given Rs. 1,00,000/- towards sponsorship service to SIMA.   The service Tax is payable @ 12.36% by the service recipient under R.C.method on Sponcership Service w.e.f. 01.07.2012.  Kindly let us know whether we are eligible to take Input service credit on the strength of Bank challan or not?

Regards,

VINAY

 

[YAGAY andSUN]

According to the Para 10.1.4of the Taxation of Services- An Educational Guide:-

Normally, the credit of the entire tax paid on the service received by the service receiver would be available to the service recipient subject to the provisions of the Cenvat Credit Rule, 2004. The credit of tax paid by the service provider would be available on the basis of the invoice subject to the conditions specified in the Cenvat Credit Rule, 2004. The credit of tax paid by the service recipient under partial reverse charge would be available on the basis on the tax payment challan, again subject to conditions specified in the said Rules.

AI Summary

Eligibility to Claim Input Service Credit for Sponsorship Payments under Cenvat Credit Rules, 2004 Explained A company, a member of the Sponge Iron Manufacturers Association, inquired about the eligibility to claim input service credit for a sponsorship service payment of Rs. 1,00,000 made to the association, with service tax payable at 12.36% under the reverse charge method effective from July 1, 2012. The response indicated that, generally, the service recipient can avail credit for the entire tax paid, based on the tax payment challan, subject to compliance with the Cenvat Credit Rules, 2004.