Cenvat credit on common input services

[Guest]

Respected Sir, We are providing Air Travel Agent, Rent a Cab, & Tour operator Services. We are claiming abatement on Tour operator and Rent a Cab services. We are using common input services for providing all the three output services. Now my question is how much cenvat credit we can avail on common input services used for providing output services? Thanks

[Guest]

In my view, based on Rule 6(3) of amended CENVAT Credit Rules, you may either pay 8% on the abatement value and avail full CENVAT credit or you can reverse the credit to the extent of input services used towards Tour operator & Rent a cap service as per the formula given and avail credit for the balance.

[Madhukar N Hiregange]

In addition to Mr. ramanujams views I wish to add that 100% credit on the 16/17 specified common services would be available as the restriction under Rule 6 are not applicable.

[Guest]

No cenvat credit is eligible when any form of abetment is opted for.

[Rakesh Chitkara]

I would go alongwith the last reply. Notification No. 1/2006, as amended by Notification 38/2007 prescribes different rates of abatement for composite tour operator services, with a proviso that simultaneous cenvat credit on input services and abatement can not be availed. It makes better sense to opt for abatement.

AI Summary

Cenvat credit on common input services: choose between credit with prescribed compliance or reversal when availing abatement. Entitlement to cenvat credit on common input services hinges on the chosen compliance route: either pay on the abated value and claim full credit, or apply the prescribed credit reversal formula to reverse credit attributable to abated services and retain the balance; certain specified common services may attract full credit, while a proviso in the notifications bars simultaneous abatement and cenvat credit for composite tour operator services.