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Neeladri Chakrabarti
The Scheme
CENVAT Credit Rules, 2004 provide a mechanism of taking credit of the tax paid at the earlier stage to pay the output service tax / excise duty liability Manufacturer of taxable goods & provider of taxable service is allowed to avail & utilize credit Credit is allowed on inputs, input services and capital goods Credit of inputs may be taken immediately on receipt of goods Credit on input services may be taken only after payment of consideration
Credit of inputs/ input services may be utilized for payment of excise duty and service tax
Capital goods used in factory of manufacturer of final products (not used in office)
Credit allowed of capital goods used in office of service provider Credit allowed even if goods acquired on lease, hire purchase or loan agreement, from a financing company
Manufacturer
Credit allowed of services used In relation to setting up a factory/office/premise (of service provider) For sales promotion, advertisement, procurement, management of business such as accounting, auditing, financing, recruitment & quality control
Service Provider
Input services received & consumed by service provider in relation to providing output service
Input services used by manufacturer in/ in relation to manufacture of final products & clearance of final products from place of removal
Vital Points
Capital goods No credit if exclusively used in manufacture of exempt goods / services Capital goods - 50% credit - 1st financial year - Balance - subsequent years subject to possession Capital goods removed as such duty paid equal to the amount of credit availed.
ISD means :
An office of the manufacturer or service provider Receives invoices for purchase of input services Distributes the credit of service tax paid on the input services to the manufacturer or service provider
Input Services
ISD
Manufacturer
Service Provider
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