Central ExciseCENVAT Credit
Rajesh Choudhary
CENVAT Credit
Rajesh Choudhary
What to avail
When to avail
How to avail
How much to avail
How to utilize
Rule 2 & 3
Rule 4
Rule 9
Rule 6 & 7
Rule 3
04/21/23 2
CENVAT Credit
Rajesh Choudhary
Inputs Capital Goods Input Services
04/21/23 3
CENVAT Credit Motor Vehicles
Applicable from April 01, 2012
Trucks & Lorries
Cars & CabsMotorcyclesBus
Specified Motor Vehicles
their BodiesRajesh Choudhary 04/21/23 4
CENVAT Credit Motor Vehicles
Specified Service Providers
Courier Service,Tour Operator Service,Rent-a-Cab Service,Cargo Handling Service,Transport of Goods by Road,Outdoor Caterer Service,Pandal or Samiana Service
Rajesh Choudhary 04/21/23 5
CENVAT Credit Motor Vehicles
As Capital Goods
Specified Motor Vehicles + Other Motor Vehiclesto
Specified Service Providers
Other Motor Vehiclesto
All Service Providers
Rajesh Choudhary 04/21/23 6
CENVAT Credit Motor Vehicles
Input Service of Rent a Cab/Hiring
Specified Motor Vehicles + Other Motor Vehiclesto
Specified Service Providers
Other Motor Vehiclesto
All Service Providers
Rajesh Choudhary 04/21/23 7
CENVAT Credit Motor Vehicles
Input Service of Repair/Insurance
Specified Motor Vehicles + Other Motor Vehiclesto
Specified Service Providers + Manufacturer/Insurer
Other Motor Vehiclesto
All Service Providers + Manufacturer/Insurer
Rajesh Choudhary 04/21/23 8
CENVAT Credit RulesCapital goods
removed after use or removed as scrape/wasteApplicable from 17.03.2012
CENVAT Credit to be reversed
Higher of(A)Total CENVAT Credit on Capital GoodLess2.5% CENVAT Credit for each Quarter or part from date of taking Credit
(B)Duty on transaction value
Rajesh Choudhary 04/21/23 9
CENVAT Credit Document
Rajesh Choudhary 04/21/23 10
Refund of CENVAT CreditRule 5 redrafted
Rajesh Choudhary
Refund amount =
Export turnover of services
Net CENVAT CreditX
Total turnover
04/21/23 11
Refund of CENVAT CreditValue of Export Service
Rajesh Choudhary
2009-10For
2010-11 2011-12
Payments received for 2010-11
+Exports completed
-Advance for Exports
Advance for Exports
Exports to be completed
04/21/23 12
Refund of CENVAT CreditTotal turnover
Export turnover of Service+
Inputs removed as such not capital goods
Rajesh Choudhary 04/21/23 13
CENVAT Credit RulesStandard ratio of reversal in Rule 6(3)(i) enhanced from 5% to 6% (April 01, 2012)
Calculation of reversal ratio Rule 6(3)(ii)
Exempted Service Turnover
Total Service Turnover
Rajesh Choudhary
CENVAT Credit
04/21/23 14
Value of Service
Rajesh Choudhary
Service taxed @ normal rate
&
Service taxed under abatement
Value as per Section 67
Service taxed @ special rate
Tax @ special rate Grossed up by Normal Rate
Trading
a)10% of COSor
a)Sale price less COS
04/21/23 15
SampleProfit & Loss A/c
Rajesh Choudhary
Commission on sale of air tickets 100 L(taxed paid on basic fare)
Tour operations 20 L(packaged tours)
Outbound tours 30 L(payment in Forex)
Trading of goods 50 L
Commission toSub agents 70 L
Cost of local tour packagespurchased 15 L
Cost of outbound tourspurchased 25 L
Cost of goods purchased 48 L
Overheads 50 L
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Value of Commission Income Taxable Service
Commission Income 100 LBasic Fare 50 L
Service Tax @ 0.6% 50L X 0.6% 30000
Value30000 X 100/10 3 L
Rajesh Choudhary 04/21/23 17
Value of Tour OperationsExempted Service
Tour Operations Income 20 L
Service Tax @ 10% on 75% value20L X 75% X 10% 1.5 L
Value 20 L
Value of Outbound toursTaxable Service
Export of Services 30 L Rajesh Choudhary 04/21/23 18
Value of Trading Income Exempted Service
Trading Income 50 LPurchases 48 L
Cost of Sales 45 LOpening Stock 0+ Purchases 48 L - Closing Stock 3 L
Rajesh Choudhary 04/21/23 19
Value of Trading Income Exempted Service
Higher of (a) and (b)
(a)Sales less COS50 L – 45 L 5 L
(b) 10% of COS45 L X 10% 4.5 L
Value 5 L
Rajesh Choudhary 04/21/23 20
CENVAT Credit eligible
Rajesh Choudhary
Commission to Sub agents 70 L (35 L X 0.6%) 21000
Cost of local tour packages 15 L (15 L X 75% X 10%) 112500
Cost of outbound tours 25 L Nil
Cost of goods purchased 48 L Nil
Overhead (50 L X 10%) 50 L 500000
Total Credit 521000
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How much to avail
Exempted Services 25 LTrading & Tour operations
Taxable Services 33 LCommission & Outbound Tours
CENVAT Credit allowed
521000 – {25 L/(33 L + 25L) X 521000}= 296431
Rajesh Choudhary 04/21/23 22
Input Service Distributor
Rajesh Choudhary
Common Credit
Pro rata basis
Credit related to exempted unit
No distribution
Credit exclusively related to one unit
No distribution to other units
04/21/23 23
CENVAT Credit Rules
Purchased in 2009 Credit availed by CA 10 L
No tax liability till2012
EarlierCredit to be reversed
with Interest
NowCredit to be reversed
without Interest
Applicable from 17 March 2012Rule 14
Rajesh Choudhary 04/21/23 24
Reverse Charge
Applicable from date to be Notified
After enactment of Finance Bill, 2012
Rajesh Choudhary 04/21/23 25
Reverse Charge
TelecommunicationGeneral Insurance AuxiliaryInsurance Auxiliary Service
by agentImport of ServiceGoods Transport Agency ServiceMutual Fund DistributorsSponsorship Service
Earlier Now
Rajesh Choudhary 04/21/23 26
Reverse Charge
by Individual Advocates
Service
toBusiness Entity
Tax Nil 100%
Rajesh Choudhary 04/21/23 27
Reverse Charge
by Arbitral Tribunal
Service
toBusiness Entity
Tax Nil 100%
Rajesh Choudhary 04/21/23 28
Reverse Charge
by Government/ local authority
Support Service
toBusiness Entity
Tax Nil 100%
Rajesh Choudhary 04/21/23 29
Reverse ChargeRent a Cab Service
toBody Corporate
Tax (abetment) Nil 100%
byIndividual/ proprietary firm/HUF
byPartnership firm/LLP
Tax 60% 40%
Rajesh Choudhary 04/21/23 30
Reverse ChargeManpower Service
toBody Corporate
byIndividual/ proprietary firm/HUF
byPartnership firm/LLP
Tax 25% 75% Rajesh Choudhary 04/21/23 31
Reverse ChargeWorks Contract Service
toBody Corporate
byIndividual/ proprietary firm/HUF
byPartnership firm/LLP
Tax 50% 50% Rajesh Choudhary 04/21/23 32
CENVAT Credit Document
Credit allowed on
Invoices
+
Challans used for payment of Tax under Reverse Charge
Rajesh Choudhary 04/21/23 33
New Abatement & Valuation Scheme
Applicable from
date to be Notifiedenactment of Finance Bill, 2012
Rajesh Choudhary 04/21/23 34
New Abatement & Valuation Scheme
Rajesh Choudhary
Works Contract Service
Composition Scheme@ 4.8% + Cess on full value
Value = Gross Amount
lessSale of/
Transfer in property
Exemption
Original work 60%
Completion work 40%
Land included 75%No Credit of Inputs
04/21/23 35
New Abatement & Valuation Scheme
Rajesh Choudhary
Existing Abatement
90
70
NA
Proposed Abatement
90
70
70
Financial Leasing Service04/2006
Transport of Goods by Rail
Transport of Passengers by Rail
CENVAT Credit of Inputs, Capital Goods and Input Services Allowed
04/21/23 36
New Abatement & Valuation Scheme
Rajesh Choudhary
Existing Abatement
40
3070 50
Proposed Abatement
30
306040
• Convention center/Mandap + Catering• Pandal + Catering• Restaurant• Outdoor Catering
Credit of Capital Goods and Input Services AllowedInputs (food items) not allowed
04/21/23 37
New Abatement & Valuation Scheme
Rajesh Choudhary
Existing Abatement
50
NASlabs
deleted
Proposed Abatement
40
60 01.04.2012
• Hotels
• Airlines
Credit of Input Services AllowedInputs & Capital Goods not allowed
04/21/23 38
New Abatement & Valuation Scheme
Rajesh Choudhary
Existing Abatement
75603025
Proposed Abatement
75603050
• GTA• Rent a Cab• Chit Fund• Goods by Vessel
Credit of Capital Goods, Input Services and Inputs not allowed
04/21/23 39
New Abatement & Valuation Scheme
Rajesh Choudhary
Existing Abatement
75
90
60
Proposed Abatement
75
90
60
• Tour & TravelPackage Tour
Hotel Accommodation
Unpackaged Tour
Credit of Capital Goods, Input Services and Inputs not allowed
04/21/23 40
Rajesh Choudhary
CHOUDHARY & ASSOCIATESCHARTERED ACCOUNTANTS
9987699427