Reversal of Service Tax Input Credit

[Ranbir Singh]

Respected Sir,

 We are consulting engineers. We  are  taking service tax input credit on billing /accrual basis. My query is regarding Reversal of Service tax input credit if we do not pay within 90 day as we are adopting method of reversal of Cenvat credit in books  instead of pay through separate challan.

 For example

 Bill date is 10 April 2012,  and we have taken input credit in the month of April-2012, but we have not paid within 90 days from bill date means till 09^th July 2012. Please advise when should we pass the reversal entry of input credit.? Either on  30^th april 2012 or 09^th July 2012.

[YAGAY andSUN]

On or after 09th July 2012 you can reverse the CENVAT credit.

AI Summary

Cenvat credit reversal required when payment to service provider is not made within the prescribed period; reverse in books after that period. When service providers claiming CENVAT/input credit on a billing/accrual basis do not pay the service provider within the prescribed payment period measured from the bill date, they must reverse the credit. The reversal may be effected in the books (instead of payment through a challan) on or after the expiry of that prescribed period from the bill date.