Service tax input credit can be availed by manufacturers and adjusted against the tax payable on output services. There is an exhaustive list of services that are included and excluded from this.
Note: Service Tax has been replaced by the Goods and Services Tax (GST) starting 1 July 2017.
Manufacturers can avail CENVAT credit on input services and that can be adjusted against the tax payable on the output services.
Input services are any service that is used by a provider for providing output service that is taxable or is used by a manufacturer either directly or indirectly in relation to manufacture the final product and clearance of the final product.
Manufacturer can avail CENVAT credit on inputs that he uses for his output service that is taxable. For instance an interior decorating company pays rent for its office but the service that it provides is output service. The service tax paid on rent is input credit and can be adjusted against the service tax payable by the company.
Manufacturer using Annual Maintenance Contract and transportation service, they are the input services and the tax paid on those services is input credit and it can be adjusted against excise duty payable.
The following services are excluded from input service if they are used for the following purposes:
Credit Card:
Credit Score:
Personal Loan:
Home Loan:
Fixed Deposit:
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