Credit of R & D Cess on Royality, Service Tax

[Gourav Arora]

Experts.

whether Credit of R & D cess allowed for all services.? whether we can claim R & D credit paid on service registered under management consultancy.?.

.

Regards.

Gourav Arora

Posts / Replies

[JAMES PG]

R&D Cess paid can be adjusted against the ST payable under the particular category. It is in not in the form of credit mechanism.

[Gourav Arora]

that ok, sir if we are paying Service Tax and R & D Cess on Royailty on Service of Management Consultancy. can we use R & D cess in any way?

[Pradeep Khatri]

First you have to pay the R&D cess @ 5% and after that you can adjust it from the Service Tax ( 12.36% - 5% = 7.36%).

[CA Seetharaman K C]

Relevant Notification which addresses this issue is as follows: Notification No.14/2012 - Service Tax New Delhi, the 17th March 2012 G.S.R. 212(E). - In exercise of the powers conferred by sub-section (1) of section 93 of theFinance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service involving import of technology, from so much of the service tax leviable thereon under section 66B of the said Act, as is equivalent to the amount of cess payable on the said import of technology under the provisions of section 3 of the Research and Development Cess Act, 1986 (32 of 1986), subject to the following conditions, namely:- (a) that the said amount of Research and Development Cess is paid within six months from the date of invoice or in case of associated enterprises, the date of credit in the books of account: Provided that the exemption shall be available only if the Research and Development Cess is paid at the time or before the payment for the service; (b) that the records of Research and Development Cess are maintained for establishing the linkage between the invoice or the credit entry, as the case may be, and the Research and Development Cess payment challan. 2. This notification shall come into force from the date on which section 66B of the Finance Act, 1994 comes into effect. [F. No. 334/1/2012-TRU] (Samar Nanda) Under Secretary to the Government of India

[Gourav Arora]

Sir .

As Per Notificaion No 18/2002 and 17/2004 of Service tax credit of R & D cess in allowed for only for consulting  engineer and holder of intellectual property. if our service fall under management consultancy...then can we take credit of R & D and how?.

Pls .

Regards

[CA Seetharaman K C]

Notification no 14/2012 specifies that credit can be taken in any service involving import of Technology, so if your service involves the import of technology then credit can be taken

[Gourav Arora]

thanks sir..for ur valueable advice.....

Merry Xmas

Sir in case we have already paid R & D cess and service tax in March 12 and June 12 both with full amount. can we adjust these R & D cess payment in any other way now. beacause notification came in March 2012. .

Thanks & Regards

[CA Seetharaman K C]

Thanks Sir for your kind X mas greetings. I wish you and your family a Merry Xmas and a Happy New Year.

Again in the notification tthe condition is that payment of R & D Cess should be made before the payemnt of services. So in that case you should be able to take credit provided you have proper records to show the nexus between the two. The relevant portion is as reproduced below:

Provided that the exemption shall be available only if the Research and Development Cess is paid at the time or before the payment for the service;

(b) that the records of Research and Development Cess are maintained for establishing the linkage between the invoice or the credit entry, as the case may be, and the Research and Development Cess payment challan.

[Gourav Arora]

Thanks sir.

.

but i want to clear one think ....as in our case at the time of credit to party  in the books of accounts we have paid 5% as R & D cess and 12.36% as service tax.but till date no payment is made for service to party. then can we adjust R & D cess for next payment of Service tax for import of technology.

Regards

[CA Seetharaman K C]

Dear Sir

The requirement to claim the exemption is that R &D Cess is paid before the payment for the service is made. In your case the R & D Cess is already pais and the payment for the service is still pending which is okay as staed in the notification

"Provided that the exemption shall be available only if the Research and Development Cess is paid at the time or before the payment for the service"

[RAM NAUDIYAL]

Can we take cenvat credit of service tax on royalty (12.36%-5%) that is 7.36%

[MOHIT MANGLA]

Dear Sir,

I want to know accounting entries along with amount required to be passed in my books of accounts in compliance to service tax payable, service tax credit and R & D Cess.