• Claiming service tax on subsidized services allowed?

Hi!! 
We are a service oriented company in Hyderabad and recently in our annual audit we were disallowed credit for the below service tax we claimed: 

1. Restaurant Bills (staff and management reward) 
2. Hotel Bills (training session) 
3. Transport (for raw materials) 

Issue is that the auditor told us that we cannot claim service tax amount on any services where the service tax is not completely 15% on the basic amount. 

Please suggest!! 

Thanks!! 

Nilesh Prithani

Read more at: http://www.caclubindia.com/forum/claiming-service-tax-on-subsidized-services-allowed--387499.asp
Asked 7 years ago in Service Tax

Hi,

You can take Service Tax Input for any input service (Except for input tax restricted services as per CENVAT Credit Rules, 2004) provided the same is utilized for the purpose of providing the output tax service.

If you are utilizing the mentioned services for the purpose of your business, you can certainly claim input on Restaurant Bills and Hotel Bills. Regarding Transport, you can take input for services provided by a Goods Transport agency. But Rent-a-cab service input is not available as per CENVAT Credit Rules.

Note: Only Service Tax & KKC Input can be taken. SBC cannot be taken as Input.

Pradeep Bhat
CA, Bengaluru
542 Answers
94 Consultations

5.0 on 5.0

Yaa, your Auditor is correct. In terms of Cenvat Credit Rules, if the service tax is paid on concessional rates then no cenvat credit is available on such expenses

Vidya Jain
CA, Kolkata
1008 Answers
58 Consultations

4.8 on 5.0

Hello Sir,

The auditor is very well correct in his opinion. You can take service tax credit only if it is charged in full but in all the cases mentioned above composite/ reduced rate of tax is charged and hence Service Tax Input credit cannot be claimed.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

Hello Sir,

You will be able to claim Input Credit in all the above mentioned cases only if ST is charged in full.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

Dear Sir

Your auditor is correct. You can take service tax input credit only when it is charged at full rate. If the service tax is charged at but if the service tax is charged at concessional rate then credit cannot be claimed.

Please feel free to call/revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Scenario 1: Since the company is reimbursing the costs, input is allowable. However, the Department may disallow saying the Bills are not in the name of the Company. Try and book the Rooms on behalf of the company wherever possible.

Scenario 2: No problem here. You can certainly claim the input

Scenario 3: Training sessions to employees is a legitimate business expense. You can claim the Input.

Pradeep Bhat
CA, Bengaluru
542 Answers
94 Consultations

5.0 on 5.0

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