What is CENVAT In the year 1986, modified VAT (MODVAT) was introduced whereby the manufacturers could avail credit for duty paid on inputs used in, or in relation to manufacture of final products for being set off against the duty payable on final products. The scheme was made applicable to capital goods as well later on. MODVAT became CENVAT (centralized VAT) eventually. CENVAT credit Rules, 2004 replaced CENVAT Credit Rules, 2002 and Service Tax Credit Rules, 2002. The 2004 rules integrated credit of goods and services. Implicitly, excise duty paid on inputs / capital goods and service tax paid on input services can be adjusted towards tax liability of the manufacturer in case of excise duty and service provider in case of service tax. Thus, an assessee can avail credit of excise duty / service tax paid on inputs and input services. This credit is collectively known as CENVAT credit. This pool can be utilized for payment of excise duty on any final product and/or service tax on output services, subject to certain restrictions and limitations. Basic conditions - Basic conditions for availing and utilizing CENVAT credit are given below- 1. Excisable goods are manufactured or taxable services are provided. 2. Excise duty paid on input goods, excise duty paid on capital goods and service tax paid on input services is CENVAT credit, subject to certain limitations / restrictions. 3. CENVAT credit is available for payment of excise duty on manufactured output goods or service tax on output service subject to restrictions as specified. 4. Credit is not available if final product is exempt from excise duty or output service is not taxable. 5. Credit is available on the basis of specified documents only. NEERAJ GUPTA TAX CLASSES For regular tax audio revisions through whatsapp please register free by sending name and city at 9811651641 For facebook updates click get notifications after liking the facebook page fb/freetaxationclasses
Posted on: Sat, 17 Jan 2015 06:10:09 +0000
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