which ratio should take for distributing service tax credit through ISD., Service Tax

[manan pandya]

Res. Sir,

we are manufacturer and having more than 3 excisable units ...we are receiving service tax credit invoices in the name of Head Office Address ..if i want to distribute this service in all excisable units so

let me know that which ratio should consider while i am distributing service ..

for example in july-2014 i want to take service tax credit which are booked in Head office through ISD so which ratio will be considered ?

Posts / Replies

[Pradeep Khatri]

Dear Manan,

• Rule 7 of the CENVAT Credit Rules, 2004, provides for the manner of distribution of common input service credit by the Input Service Distributor. Rule 7 (d) was amended to provide for distribution of common input service credit among all units in their turnover ratio of the relevant period.
• It clarifies that the allows distribution of input service credit to all units (which are operational in the current year) in the ratio of their turnover of the previous year/previous quarter as the case may be. No need to prove that the services are used for respective unit.

Please read Rule 7 thoroughly before taking any action for distributing the CENVAT credit on Input Services.

This is for your kind information.

Regards

Team YAGAY and SUN

(Management and Indirect Tax Consultants)

[Naveed S]

Yes, and further, vide recent Circular No. 178/4/2014 – ST dated 11.07.2014, clarification for distribution of common input service credit under rule 7(d) of the Cenvat Credit Rules, 2004 has been provided.