Central%20Excise%20CENVAT%20Credit

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Central ExciseCENVAT Credit

• Rajesh Choudhary

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CENVAT Credit
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
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CENVAT Credit
Inputs
Capital Goods
Input Services
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CENVAT Credit Motor Vehicles
Applicable from April 01, 2012
Specified Motor Vehicles
Trucks Lorries
Cars Cabs
Motorcycles
Bus
their Bodies
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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
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CENVAT Credit Motor Vehicles
As Capital Goods
Specified Motor Vehicles Other Motor
Vehicles to Specified Service Providers
Other Motor Vehicles to All Service Providers
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CENVAT Credit Motor Vehicles
Input Service of Rent a Cab/Hiring
Specified Motor Vehicles Other Motor
Vehicles to Specified Service Providers
Other Motor Vehicles to All Service Providers
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CENVAT Credit Motor Vehicles
Input Service of Repair/Insurance
Specified Motor Vehicles Other Motor
Vehicles to Specified Service Providers
Manufacturer/Insurer
Other Motor Vehicles to All Service Providers
Manufacturer/Insurer
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CENVAT Credit Rules
Capital goods removed after use or removed as
scrape/waste Applicable from 17.03.2012
CENVAT Credit to be reversed Higher of
(A) Total CENVAT Credit on Capital Good Less 2.5
CENVAT Credit for each Quarter or part from date
of taking Credit
(B) Duty on transaction value
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CENVAT Credit Document
Capital goods and Inputs Allowed when received
in premises Delivered to Service
Provider/Manufacture with Documentary Evidence
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Refund of CENVAT Credit
Rule 5 redrafted
Refund amount
Export turnover of services
Net CENVAT Credit
X
Total turnover
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Refund of CENVAT Credit
Value of Export Service
For 2010-11
2009-10
2011-12
Payments received for 2010-11 Exports
completed - Advance for Exports
Advance for Exports
Exports to be completed
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Refund of CENVAT Credit
Total turnover Export turnover of
Service Inputs removed as such not capital goods
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CENVAT Credit Rules
Standard 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
CENVAT Credit
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Value of Service
Service taxed _at_ normal rate Service taxed
under abatement Value as per Section 67
Service taxed _at_ special rate Tax _at_ special rate
Grossed up by Normal Rate

• Trading
• 10 of COS
• or
• Sale price less COS

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SampleProfit Loss A/c
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 to Sub agents 70 L Cost of local
tour packages purchased 15 L Cost of outbound
tours purchased 25 L Cost of goods
purchased 48 L Overheads 50 L
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Value of Commission Income Taxable
Service Commission Income 100 L Basic
Fare 50 L Service Tax _at_ 0.6 50L X
0.6 30000 Value 30000 X 100/10 3
L
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Value of Tour Operations Exempted Service Tour
Operations Income 20 L Service Tax _at_ 10 on
75 value 20L X 75 X 10 1.5
L Value 20 L Value of Outbound
tours Taxable Service Export of Services
30 L
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Value of Trading Income Exempted
Service Trading Income 50
L Purchases 48 L Cost of Sales 45
L Opening Stock 0 Purchases 48 L - Closing
Stock 3 L
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• Value of Trading Income
• Exempted Service
• Higher of (a) and (b)
• Sales less COS
• 50 L 45 L 5 L
• (b) 10 of COS
• 45 L X 10 4.5 L
• Value 5 L

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CENVAT Credit eligible
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
L Trading Tour operations Taxable
Services 33 L Commission Outbound
Tours CENVAT Credit allowed 521000 25 L/(33
L 25L) X 521000 296431
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Input Service Distributor
Common Credit Pro rata basis
Credit related to exempted unit No distribution
Credit exclusively related to one unit No
distribution to other units
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CENVAT Credit Rules
Applicable from 17 March 2012 Rule 14
2012
No tax liability till
Earlier Credit to be reversed with Interest
Purchased in 2009 Credit availed by CA 10 L
Now Credit to be reversed without Interest
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Reverse Charge
Applicable from date to be Notified After
enactment of Finance Bill, 2012
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Reverse Charge
Earlier
Now

• Telecommunication
• General Insurance Auxiliary
• Insurance Auxiliary Service
• by agent
• Import of Service
• Goods Transport Agency Service
• Mutual Fund Distributors
• Sponsorship Service

a a a a a a a
r r a a a r a
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Reverse Charge
Service
to Business Entity
by Individual Advocates
Tax Nil 100
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Reverse Charge
Service
by Arbitral Tribunal
to Business Entity
Tax Nil
100
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Reverse Charge
Support Service
to Business Entity
by Government/ local authority
Tax Nil
100
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Reverse Charge
Rent a Cab Service
by Individual/ proprietary firm/HUF
by Partnership firm/LLP
to Body Corporate
Tax (abetment) Nil 100
Tax 60
40
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Reverse Charge
Manpower Service
by Individual/ proprietary firm/HUF
by Partnership firm/LLP
to Body Corporate
Tax 25
75
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Reverse Charge
Works Contract Service
by Individual/ proprietary firm/HUF
by Partnership firm/LLP
to Body Corporate
Tax 50
50
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CENVAT Credit Document
Credit allowed on Invoices Challans used for
payment of Tax under Reverse Charge
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New Abatement Valuation Scheme

• Applicable from
• date to be Notified
• enactment of Finance Bill, 2012

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New Abatement Valuation Scheme
Works Contract Service
Exemption Original work 60 Completion work
40 Land included 75
Composition Scheme _at_ 4.8 Cess on full value
Value Gross Amount less Sale of/ Transfer in
property
No Credit of Inputs
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New Abatement Valuation Scheme
Existing Abatement 90 70 NA
Proposed Abatement 90 70 70
Financial Leasing Service 04/2006 Transport of
Goods by Rail Transport of Passengers by Rail
CENVAT Credit of Inputs, Capital Goods and Input
Services Allowed
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New Abatement Valuation Scheme
Existing Abatement 40 30 70 50
Proposed Abatement 30 30 60 40

• Convention center/Mandap Catering
• Pandal Catering
• Restaurant
• Outdoor Catering

Credit of Capital Goods and Input Services
Allowed Inputs (food items) not allowed
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New Abatement Valuation Scheme
Existing Abatement 50 NA Slabs deleted
Proposed Abatement 40 60 01.04.2012

• Hotels
• Airlines

Credit of Input Services Allowed Inputs Capital
Goods not allowed
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New Abatement Valuation Scheme
Existing Abatement 75 60 30 25
Proposed Abatement 75 60 30 50

• GTA
• Rent a Cab
• Chit Fund
• Goods by Vessel

Credit of Capital Goods, Input Services and
Inputs not allowed
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New Abatement Valuation Scheme
Existing Abatement 75 90 60
Proposed Abatement 75 90 60

• Tour Travel
• Package Tour
• Hotel Accommodation
• Unpackaged Tour

Credit of Capital Goods, Input Services and
Inputs not allowed
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• Rajesh Choudhary
• CHOUDHARY ASSOCIATES
• CHARTERED ACCOUNTANTS
• carcchoudhary_at_gmail.com
• 9987699427