Analysis of Union Budget 2012 CENVAT Credit CA. Atul Kumar Gupta.

Analysis of Union Budget 2012CENVAT Credit

CA. Atul Kumar Gupta

CENVAT Credit


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

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CENVAT Credit


Inputs Capital Goods Input Services

04/10/23 3

CENVAT Credit Motor Vehicles

Applicable from April 01, 2012

Trucks & Lorries

Cars & CabsMotorcyclesBus

Specified Motor Vehicles

their BodiesCA. Atul Kumar Gupta04/10/23 4


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

CA. Atul Kumar Gupta04/10/23 5


As Capital Goods

Specified Motor Vehicles + Other Motor Vehiclesto


Other Motor Vehiclesto

All Service Providers



Input Service of Rent a Cab/Hiring




All Service Providers



Input Service of Repair/Insurance


Specified Service Providers + Manufacturer/Insurer


All Service Providers + Manufacturer/Insurer


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


CENVAT Credit Document


Refund of CENVAT CreditRule 5 redrafted


Refund amount =

Export turnover of services

Net CENVAT CreditX

Total turnover

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Refund of CENVAT CreditValue of Export Service


2009-10For

2010-11 2011-12

Payments received for 2010-11

+Exports completed

-Advance for Exports

Advance for Exports

Exports to be completed

04/10/23 12

Refund of CENVAT CreditTotal turnover

Export turnover of Service+

Inputs removed as such not capital goods


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


CENVAT Credit

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Value of Service


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

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SampleProfit & Loss A/c


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

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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


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 CA. Atul Kumar Gupta04/10/23 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


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


CENVAT Credit eligible


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

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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


Input Service Distributor


Common Credit

Pro rata basis

Credit related to exempted unit

No distribution

Credit exclusively related to one unit

No distribution to other units

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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


Reverse Charge

Applicable from date to be Notified

After enactment of Finance Bill, 2012


Reverse Charge

TelecommunicationGeneral Insurance AuxiliaryInsurance Auxiliary Service

by agentImport of ServiceGoods Transport Agency ServiceMutual Fund DistributorsSponsorship Service

Earlier Now


Reverse Charge

by Individual Advocates

Service

toBusiness Entity

Tax Nil 100%


Reverse Charge

by Arbitral Tribunal

Service

toBusiness Entity

Tax Nil 100%


Reverse Charge

by Government/ local authority

Support Service

toBusiness Entity

Tax Nil 100%


Reverse ChargeRent a Cab Service

toBody Corporate

Tax (abetment) Nil 100%

byIndividual/ proprietary firm/HUF

byPartnership firm/LLP

Tax 60% 40%


Reverse ChargeManpower Service

toBody Corporate



Tax 25% 75% CA. Atul Kumar Gupta04/10/23 31

Reverse ChargeWorks Contract Service

toBody Corporate



Tax 50% 50% CA. Atul Kumar Gupta04/10/23 32

CENVAT Credit Document

Credit allowed on

Invoices

+

Challans used for payment of Tax under Reverse Charge


New Abatement & Valuation Scheme

Applicable from

date to be Notifiedenactment of Finance Bill, 2012




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

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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

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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

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Existing Abatement

50

NASlabs

deleted

Proposed Abatement

40

60 01.04.2012

• Hotels

• Airlines

Credit of Input Services AllowedInputs & Capital Goods not allowed

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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

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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

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Atul Kumar Gupta

A P R A & ASSOCIATESCHARTERED ACCOUNTANTS

[email protected], 9810103611

Analysis of Union Budget 2012 CENVAT Credit CA. Atul Kumar Gupta.

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