S.Tax Input Credit under reverse charges Machenism

[RAM SHARMA]

Dear Experts,

We are in Taxable Terrotory and  receiving services from non taxable territory like J&K and liable to pay service tax under reverse charge machenism. Can we take input credit after payment of service tax.

Thanks

[CASeetharaman KC]

The First proviso to Rule 4 (7) of the Cenvat Credit Rule, 2004 clearly specifies that in case of any service tax paid on the reverse charge mechanism CENVAT credit shall be allowed only after the payment is made. As the service receiver has to make the payment the CENVAT credit can be taken on the basis of the challan making such payment

AI Summary

Reverse charge Cenvat credit permitted only after payment; credit may be availed on production of payment challan. The First proviso to Rule 4(7) of the Cenvat Credit Rules, 2004 conditions CENVAT credit for service tax paid under the reverse charge mechanism on actual payment by the service receiver; the recipient may claim credit only after payment and can do so on the basis of the tax payment challan.