What is Cenavat Credit on input Services in Service Tax? How
to claim Cenavat Credit in Service Tax Return?
Cenavat Credit is a very useful facility for those use input
services. Those who take input services has the facility to
claim Cenavat Credit. Service Tax liability is huge amount
and so system of claiming Cenavat Credit on Inputs and input
services is developed. Organised businesses can pass through
technicalities of Cenavat Credit Rules and can claim Cenavat
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 Cenavat
credit properly without attracting additional liability
under Rule 6 of Cenavat Credit Rules.
Cenavat credit can be claimed while filing Service tax
return. Proper claim of Cenavat 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 Cenavat 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.
