Answer / kushal gampale

Service Tax Credit is the credit available to a service provider, at the time of paying the service tax on his output services, of the service tax paid by him on his input services.
eg -
et us consider this example-

Vivek is an architect. He renders services to his client and collects the service tax amounting to Rs. 10,000.

He also uses the services of a CA who helps him in maintaining accounts and gives his tax advices. He pays Rs. 2,000 as service tax to his CA for such services.

He also purchases goods from a local supplier for his office. The supplier charges him VAT of Rs.500 on the goods purchased.

He has purchased few equipments directly from the local manufacturer who charged him excise duty of Rs.1000.

So here we have-

Output taxes collected - Rs.10,000 as service tax (collected by central government)
Input taxes paid-
Rs.2000 as service tax (collected by central government)
Rs.500 as VAT (collected by state government)
Rs.1000 as excise duty (collected by central government)

So now while paying the service tax of Rs.10,000 Vivek would ask the government for set off of all the taxes paid by him previously which comes to Rs. 3,500 (sum of all the input taxes above).

However, as mentioned earlier that Central and State governments are different entities, only set off of service tax and excise duty shall be allowed for paying service tax liability, as VAT was previously paid to the state government.

Thus, a set off of Rs.3,000 would be available, thereby making the net liability of Rs.7,000 as service tax.

This set off is nothing but CENVAT credit. Which in simple words would mean the set off of all the indirect taxes paid to the central government previously.

Hence, while paying excise, customs, service tax to the central government, these taxes if paid previously are to be allowed as set off against the net liabilities.

This is how it works.
pl correct me if i am wrong.

What is a ZM entry, is it recorded in the general ledger, and what does it do?

0 Answers  

---

What is ment by ZERO INVOICE please explain in detail. Give examples if possible.

2 Answers  

---

Hi, friends can anybody post the detaild configuration for the open posting period for the same, & i wanted to open the period upto 2016 or 2020, which means from 2011-2020. like this var A From A/c To A/c year To period Year 0001 + 2011 12 2020 0001 A zzzzzzzz 2011 12 2020 0001 D,K,M, S .......

1 Answers  

---

How I maintain different fiscal year variant for leading and non leading ledger. Kindly give me the answer as early as possible,am in hurry. Thanks in advance

1 Answers  

---

How are the IT jobs right now?

0 Answers  

---

---

What is the meaning of ADHOC P.O's Do we create Adhoc P.O's to our regular Vendors.What are the Tax aspects in this Issue.

0 Answers  

---

Where are payment terms for vendor master maintained?

0 Answers  

---

How do you create tasks? What is the max number of tasks you created in your previous projects ?

0 Answers   IBM,

---

What precautions should you take while defining a shortened fiscal year?

0 Answers  

---

What is difference between parking & holding document?

7 Answers  

---

difference between base line date and value date?

0 Answers  

---

Pls send me some tickets and answerw purpose of interview?

0 Answers   Accenture, Acute Technologies,

---