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Central Excise CENVAT Credit Rajesh Choudhary

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Central ExciseCENVAT Credit

Rajesh Choudhary

CENVAT Credit

Rajesh Choudhary

What to avail

When to avail

How to avail

How much to avail

How to utilize

Rule 2 & 3

Rule 4

Rule 9

Rule 6 & 7

Rule 3

04/19/23 2

CENVAT Credit

Rajesh Choudhary

Inputs Capital Goods Input Services

04/19/23 3

CENVAT Credit Motor Vehicles

Applicable from April 01, 2012

Trucks & Lorries

Cars & CabsMotorcyclesBus

Specified Motor Vehicles

their BodiesRajesh Choudhary 04/19/23 4

CENVAT Credit Motor Vehicles

Specified Service Providers

Courier Service,Tour Operator Service,Rent-a-Cab Service,Cargo Handling Service,Transport of Goods by Road,Outdoor Caterer Service,Pandal or Samiana Service

Rajesh Choudhary 04/19/23 5

CENVAT Credit Motor Vehicles

As Capital Goods

Specified Motor Vehicles + Other Motor Vehiclesto

Specified Service Providers

Other Motor Vehiclesto

All Service Providers

Rajesh Choudhary 04/19/23 6

CENVAT Credit Motor Vehicles

Input Service of Rent a Cab/Hiring

Specified Motor Vehicles + Other Motor Vehiclesto

Specified Service Providers

Other Motor Vehiclesto

All Service Providers

Rajesh Choudhary 04/19/23 7

CENVAT Credit Motor Vehicles

Input Service of Repair/Insurance

Specified Motor Vehicles + Other Motor Vehiclesto

Specified Service Providers + Manufacturer/Insurer

Other Motor Vehiclesto

All Service Providers + Manufacturer/Insurer

Rajesh Choudhary 04/19/23 8

CENVAT Credit RulesCapital goods

removed after use or removed as scrape/wasteApplicable from 17.03.2012

CENVAT Credit to be reversed

Higher of(A)Total CENVAT Credit on Capital GoodLess2.5% CENVAT Credit for each Quarter or part from date of taking Credit

(B)Duty on transaction value

Rajesh Choudhary 04/19/23 9

CENVAT Credit Document

Rajesh Choudhary 04/19/23 10

Refund of CENVAT CreditRule 5 redrafted

Rajesh Choudhary

Refund amount =

Export turnover of services

Net CENVAT CreditX

Total turnover

04/19/23 11

Refund of CENVAT CreditValue of Export Service

Rajesh Choudhary

2009-10For

2010-11 2011-12

Payments received for 2010-11

+Exports completed

-Advance for Exports

Advance for Exports

Exports to be completed

04/19/23 12

Refund of CENVAT CreditTotal turnover

Export turnover of Service+

Inputs removed as such not capital goods

Rajesh Choudhary 04/19/23 13

CENVAT Credit RulesStandard ratio of reversal in Rule 6(3)(i) enhanced from 5% to 6% (April 01, 2012)

Calculation of reversal ratio Rule 6(3)(ii)

Exempted Service Turnover

Total Service Turnover

Rajesh Choudhary

CENVAT Credit

04/19/23 14

Value of Service

Rajesh Choudhary

Service taxed @ normal rate

&

Service taxed under abatement

Value as per Section 67

Service taxed @ special rate

Tax @ special rate Grossed up by Normal Rate

Trading

a)10% of COSor

a)Sale price less COS

04/19/23 15

SampleProfit & Loss A/c

Rajesh Choudhary

Commission on sale of air tickets 100 L(taxed paid on basic fare)

Tour operations 20 L(packaged tours)

Outbound tours 30 L(payment in Forex)

Trading of goods 50 L

Commission toSub agents 70 L

Cost of local tour packagespurchased 15 L

Cost of outbound tourspurchased 25 L

Cost of goods purchased 48 L

Overheads 50 L

04/19/23 16

Value of Commission Income Taxable Service

Commission Income 100 LBasic Fare 50 L

Service Tax @ 0.6% 50L X 0.6% 30000

Value30000 X 100/10 3 L

Rajesh Choudhary 04/19/23 17

Value of Tour OperationsExempted Service

Tour Operations Income 20 L

Service Tax @ 10% on 75% value20L X 75% X 10% 1.5 L

Value 20 L

Value of Outbound toursTaxable Service

Export of Services 30 L Rajesh Choudhary 04/19/23 18

Value of Trading Income Exempted Service

Trading Income 50 LPurchases 48 L

Cost of Sales 45 LOpening Stock 0+ Purchases 48 L - Closing Stock 3 L

Rajesh Choudhary 04/19/23 19

Value of Trading Income Exempted Service

Higher of (a) and (b)

(a)Sales less COS50 L – 45 L 5 L

(b) 10% of COS45 L X 10% 4.5 L

Value 5 L

Rajesh Choudhary 04/19/23 20

CENVAT Credit eligible

Rajesh Choudhary

Commission to Sub agents 70 L (35 L X 0.6%) 21000

Cost of local tour packages 15 L (15 L X 75% X 10%) 112500

Cost of outbound tours 25 L Nil

Cost of goods purchased 48 L Nil

Overhead (50 L X 10%) 50 L 500000

Total Credit 521000

04/19/23 21

How much to avail

Exempted Services 25 LTrading & Tour operations

Taxable Services 33 LCommission & Outbound Tours

CENVAT Credit allowed

521000 – {25 L/(33 L + 25L) X 521000}= 296431

Rajesh Choudhary 04/19/23 22

Input Service Distributor

Rajesh Choudhary

Common Credit

Pro rata basis

Credit related to exempted unit

No distribution

Credit exclusively related to one unit

No distribution to other units

04/19/23 23

CENVAT Credit Rules

Purchased in 2009 Credit availed by CA 10 L

No tax liability till2012

EarlierCredit to be reversed

with Interest

NowCredit to be reversed

without Interest

Applicable from 17 March 2012Rule 14

Rajesh Choudhary 04/19/23 24

Reverse Charge

Applicable from date to be Notified

After enactment of Finance Bill, 2012

Rajesh Choudhary 04/19/23 25

Reverse Charge

TelecommunicationGeneral Insurance AuxiliaryInsurance Auxiliary Service

by agentImport of ServiceGoods Transport Agency ServiceMutual Fund DistributorsSponsorship Service

Earlier Now

Rajesh Choudhary 04/19/23 26

Reverse Charge

by Individual Advocates

Service

toBusiness Entity

Tax Nil 100%

Rajesh Choudhary 04/19/23 27

Reverse Charge

by Arbitral Tribunal

Service

toBusiness Entity

Tax Nil 100%

Rajesh Choudhary 04/19/23 28

Reverse Charge

by Government/ local authority

Support Service

toBusiness Entity

Tax Nil 100%

Rajesh Choudhary 04/19/23 29

Reverse ChargeRent a Cab Service

toBody Corporate

Tax (abetment) Nil 100%

byIndividual/ proprietary firm/HUF

byPartnership firm/LLP

Tax 60% 40%

Rajesh Choudhary 04/19/23 30

Reverse ChargeManpower Service

toBody Corporate

byIndividual/ proprietary firm/HUF

byPartnership firm/LLP

Tax 25% 75% Rajesh Choudhary 04/19/23 31

Reverse ChargeWorks Contract Service

toBody Corporate

byIndividual/ proprietary firm/HUF

byPartnership firm/LLP

Tax 50% 50% Rajesh Choudhary 04/19/23 32

CENVAT Credit Document

Credit allowed on

Invoices

+

Challans used for payment of Tax under Reverse Charge

Rajesh Choudhary 04/19/23 33

New Abatement & Valuation Scheme

Applicable from

date to be Notifiedenactment of Finance Bill, 2012

Rajesh Choudhary 04/19/23 34

New Abatement & Valuation Scheme

Rajesh Choudhary

Works Contract Service

Composition Scheme@ 4.8% + Cess on full value

Value = Gross Amount

lessSale of/

Transfer in property

Exemption

Original work 60%

Completion work 40%

Land included 75%No Credit of Inputs

04/19/23 35

New Abatement & Valuation Scheme

Rajesh Choudhary

Existing Abatement

90

70

NA

Proposed Abatement

90

70

70

Financial Leasing Service04/2006

Transport of Goods by Rail

Transport of Passengers by Rail

CENVAT Credit of Inputs, Capital Goods and Input Services Allowed

04/19/23 36

New Abatement & Valuation Scheme

Rajesh Choudhary

Existing Abatement

40

3070 50

Proposed Abatement

30

306040

• Convention center/Mandap + Catering• Pandal + Catering• Restaurant• Outdoor Catering

Credit of Capital Goods and Input Services AllowedInputs (food items) not allowed

04/19/23 37

New Abatement & Valuation Scheme

Rajesh Choudhary

Existing Abatement

50

NASlabs

deleted

Proposed Abatement

40

60 01.04.2012

• Hotels

• Airlines

Credit of Input Services AllowedInputs & Capital Goods not allowed

04/19/23 38

New Abatement & Valuation Scheme

Rajesh Choudhary

Existing Abatement

75603025

Proposed Abatement

75603050

• GTA• Rent a Cab• Chit Fund• Goods by Vessel

Credit of Capital Goods, Input Services and Inputs not allowed

04/19/23 39

New Abatement & Valuation Scheme

Rajesh Choudhary

Existing Abatement

75

90

60

Proposed Abatement

75

90

60

• Tour & TravelPackage Tour

Hotel Accommodation

Unpackaged Tour

Credit of Capital Goods, Input Services and Inputs not allowed

04/19/23 40

Rajesh Choudhary

CHOUDHARY & ASSOCIATESCHARTERED ACCOUNTANTS

[email protected]

9987699427