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TMI BlogReversal of Cenvat credit under rule 6(3A) of Cenvat credit rules 2004 : 3/3X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee C provides following services: Taxable Service - Construction of Flats which are sold before completion C pays service tax @ 25% of amount billed/ received from customers after availing abatement of 75% Exempt Service Interest from bank C receives interest from bank on fixed deposits C avails CENVAT credit on common services used for providing aboveme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned taxable and exempt services. Hence, C needs to reverse proportionate CENVAT credit attributable to provision of exempt services under rule 6(3A) of CENVAT credit rules 2004 . Option 1 Option 2 Option 3 Particulars Description of Service Revenue as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P L a/c (AS 7) (Rs) % of Demand on which Service tax is paid (Rs) Demand raised (Rs) Remarks Taxable Service Construction service 80,000 25,000 1,00,000 Service tax is paid on 25% as per provisions of Notification 26/2012 Exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpt Service Interest on fixed deposit 10,000 10,000 10,000 Covered under Negative list as per section 66D of Finance Act 1994 CENVAT Credit availed on Common services ₹ 25,000 Formula for reversal of CENVAT credit on Common services Exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Services provided ------------------------------------ X [ Cenvat Credit availed on Common (Exempt services provided + Services] Taxable services provided) Cenvat credit to be reversed 10,000 ----------- [10,000 + 80,000] X 25,000 = ₹ 2,778 10,000 ----------- [10,000 + 25,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00] X 25,000 = ₹ 7,143 10,000 ----------- [10,000 + 1,00,000] X 25,000 = ₹ 2,273 According to section 65B(51), taxable service means any service on which service tax is leviable under section 66B Which option is correct and why ? - Reply By CA Venkata prasad Pasupuleti - The Reply = Interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on fixed deposit need not be considered for reversal of credit u/r 6(3) r/w 6(3A) of CCR, 2004. Please see Explanation I followed by Rule 6(3D) of CCR, 2004 - Reply By CA Venkata prasad Pasupuleti - The Reply = As per my view, Option 3 is correct. This is because turnover shall be determined going by Section 67 of Finance Act, 1994 . As per this, Value is 1.00L (construction) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not as per P L A/c. further if you take 25,000/- as taxable value for reversal calculation then you have to treat balance 75,000 as exempted service which is not required as per CCR, 2004 - Reversal of Cenvat credit under rule 6(3A) of Cenvat credit rules 2004 : 3/3 - Query Started By: - satish kumar Dated:- 29-4-2016 Service Tax - Got 2 Replies - Service Tax - Discussion Forum - Know ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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