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Cenvat Credit on Inputs and Input Services-Service Tax

Cenvat Credit
Service Tax liability is huge amount and so system of claiming Cenvat Credit on Inputs and input services is developed. Organised businesses can pass through technicalities of Cenavat Credit Rules and can claim Cenvat Credit. For this purpose there is no need to examine various inputs examine as to which input or input service is going into taxable service, which one into exempted service and which one are common to taxable and exempted services. Through this analysis it shall be possible to take cenvat credit properly without attracting additional liability under Rule 6 of Cenvat Credit Rules.



Proper claim of Cenvat Credit reduces cash outgo on payment of service Tax and at the same time reduces the cost of inputs/input services leading cash payment of taxes on value addition only. If cenvat credit is not properly taken, it will result in addition of tax element in the cost of input/output services and higher cash outflow on payment of service tax.

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