XYZ Ltd.is an IT Services Company, providing different taxable output services and also exporting certain Services. Till March 31,2008, we have been utilizing 20% Cenvat credit. With effect from April 01,2008, we would like to follow option wherein provider of output services shall pay an amount equal to 8% of the Value of exempted services provided. Query : 1. Whether the unutilized balance amount available in Cenvat Credit as on March31, 2008, can be utilized for payment of service tax for the services to be provided on and after April 01,2008?. 2. Whether export of services is treated as exempted or excluded Services; consequently whether service tax is payable @ 8% on value of services exported?. 3. In case the answer to query 1 is in the affirmative, then what process needs to be followed to avail the unutilized Cenvat Credit and whether any written communication needs to be sent to the Central Excise Department?
Payment of service tax through cenvat
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IT Firm Seeks Clarity on CENVAT Credit Use for Tax Payments; Exported Services Not Exempt, Rule 6(3) Affects Usage XYZ Ltd., an IT services company, queried about utilizing unutilized Cenvat credit for service tax payments post-March 31, 2008, and whether exported services are considered exempt for tax purposes. The response indicated that while no CENVAT Rules explicitly prevent adjusting unutilized balances, the department currently disallows it if Rule 6(3) is followed. It was advised to retain the opening balance and notify the department. Exported services are not treated as exempt, allowing full utilization of CENVAT on input services used in exports. (AI Summary)