Answer / a.palani raja

CENVAT (Central Value Added Tax )Credit Meens, Input tax of
purchase of Raw Materials, Packing Material, Fixed Assets
and Consumables. This Input tax credit we can setoff the
tax payble which we have to pay to the government

Answer / shiva

CENVAT (Central Value Added Tax) credit is the the set off
of the duty paid on inputs and capital goods and also
service tax paid on input service against the Excise duty
on final products or service tax o input service.

Ex:-
1. Purchased Raw Material (inputs) Rs.110
(Includes 10% Tax paid on it i.e. Rs.10)
2. Value addition Rs.200
3. Total (1+2) Rs.310
4. Excise Duty on (3) above, Say 20% i.e Rs. 62
-----------------------
If Cenvat credit,is there,
Cost of Product= [(110-10)+200+ 20%(100+200)]=Rs.360

If Cenvat credit,is not there,
Cost of Product= [110+200+ 20%(100+200)]=Rs.372

Answer / ramkumar nair

Before I am going to explain what is cenvat, you have to
under stand the Indian tax Central Excise Duty (BED). It
is called as basic excise duty. Every manufacturer is
liable to pay the excise duty in various kinds namely Basic
Excise Duty, Special Excise Duty, Additional Excise Duty
etc.,
Just think over a product which is reached to a end user,
how many manufacturing activities are done. So to reduce
the tax burden of the end user, the Govt. of India
introduce the MODVAT scheme which is now called CENVAT
scheme.
Based on this, if any manufacturer purchased a material,
which is duty paid, and if it is used for his further
manufacturing activity, he can avail this as credit in his
book based on the Central Excise Invoice. At the time of
selling his manufactured goods, he is liable to pay the
excise duty. He can adjust the credit which he has taken
into his book and pay the rest. For example:
CENVAT availed at the time purchased various goods
Rs.20,000 (Excise duty alone)
CENVAT payable for his product at the time sales
Rs.25,000

Answer / pooja verma

CENVAT is nothing but central value added tax which is
basically an input duty relief scheme. CENVAT scheme
istries to ensure that duty paid on input stage is offset
against duty payable at the fin al product stage and thus
prevent cascading effect of duty on final products.

Answer / afridi

SCHEME DESIGNED TO REDUCE THE CASCADING EFFECT OF INDIRECT
TAXES ON FINAL PRODUCTS.
New Cenvat Credit Rules 2004 have been introduced with
effect from 10-9-2004 in place of earlier CENVAT CREDIT
RULES , 2002 AND SERVICE TAX CREDIT RULES,2O02

This credit can be utilized for payment of excise duty on
final products and service tax on output services. Credit
taken on input services can be used for payment of excise
duty and vice versa.

Credit can be taken for all services used in relation to
setting up, modernization or repairs of a factory, services
relating to advertisement or sales promotion, management,
recruitment etc.
Particulars Under non-Cenvat Rs. Under Cenvat Rs.A Raw
material 100 100
Add excise duty @16% 16 16
Total 116 116
Credit allowable Nil 16
Net cost of X 116 100
B Value Addition 100 100
Product Y 216 200
Add excise duty @16% 34.56 32
Total cost 240.56 232
Credit allowable Nil 32
Net cost of X 240.56 200
c Value Addition 100 100
Product Z 340.56 300
Add excise duty @16% 54.40 48
Total cost of Z 394.56 348
Credit allowable Nil 48
Net cost Z 394.56 300

Answer / ravindra

cenvat credit generally related to exercise where as the
calculation of cenvat credit is like vat the tax which is
paid at the time of purchase for excise goods and the tax
which need to pay at the time of sales- the tax which is
paid at the time of purchase is known as cenvat credit
while paying the tax three things will be taken in to
consideration.
"As cenvat credit which is availed from excise"
"As the cenvat credit can availed from service tax"
"He can avail either from these if he is not availed earlier"

so most of them choose which ever amount is lower that
amount they will avail as cenvat credit

Answer / hotker

cenvat credit is nothing but a credit setoff against pre
tax paid on inputs

Answer / chandra kant

CENVAT is nothing but central value added tax which is
basically an input duty relief scheme. CENVAT scheme
is tries to ensure that duty paid on input stage will be
offset against duty payable at the fin al product stage and
thus prevent cascading effect of duty on final products.

Answer / raminder dhiman

In Simple words,

Cenvat Credit is a scheme introduced by the government to
avoid the Cascading effect.

In other words, when raw material is produced and duty is
paid to the seller of raw material, the purchaser books the
amount of excise duty in his books as credit. Later on
when finished goods are removed and excise duty is paid on
removal, the credit booked earlier is deducted from the
excise duty paid on the final product. This eliminates the
cascading effect.

Answer / sanjeev kumar mahajan

i agree with the solution by mr. Ramkumar .. Nair. subject
to the one correction that "At the time of
selling his manufactured goods, he is liable to pay the
excise duty".Actully the manufacturer become liable to pay
immediately on the manufure of the final product not at the
time of sale of manufacure goods. Wallace floor mill CAse
and Bombay tyre international Ltd. (1983) case. Further
collection can be delayed till the sale of final good.
Reference of Articl 265 of constitution - for levy of
tax ...... Thus, practicly CCR can be utilized at the time
of sale of final good or provision of services. Conclusion
Mr. Ramkumar is otherwise correct. Keep it up. Regards....

Sir, My mother has got a sum of money about 5 lacs in the form of pension arrears. Will she have to pay the income tax on this amount which is deposited in her bank account & if it is then please suggest me to save the tax at maximum possible.

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I have some queries about Service Tax, I am working in a Insurance Broking Company. 1) We have raised one bill on 25.04.09 for the services provided by us in the month Mar, 09 Now We received the chq on May, 09 followed in the Month of June,09. When the service tax is actually payable in the month of received of Service tax amount or in the month of services actually provided by us (Mar09) 2) Can we take 100% credit of Service Tax Input paid to those who provided services to us. Suppose Service Tax payable is Rs. 100/- and Service tax charged by the other firms/company Rs. 80/-. The question is That can we deduct Rs. 80/- (already paid). Now Net ST payable would be Rs. 20/- or other percent of service tax input is available 3) What is the rate of interest for Service tax if not paid on time. Pls help me out asap

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