Service tax credit on mobile phones, Service Tax

[vinay Vohra]

Our client has taken mobile phone connections for its employees under corporate connection policy. The bills are in the name of the employee. Our client is bearing mobile phone charges. Can our client claim Cenvat Credit in respect of service tax paid on mobile phone charges?

Posts / Replies

[Surender Gupta]

As per the provisions of rule 2(l) of the Cenvat Credit Rules, 2004, any input service which is used to provide output service is eligible for Cenvat Credit. Therefore, the heavy onus is on the company to prove that the mobile phone provided to its employees are for the purpose of its business and used for providing output service.

[Madhukar N Hiregange]

This is a common practice and my view is that credit may not be deniable of the same is used for pofficial purposes. It maybe wise to avail the credit after a deduction for personal use ( say 10-30%) depending on the personal use on approxiate basis.