Answer / kushal gampale

Service Tax Credit is the credit available to a service provider, at the time of paying the service tax on his output services, of the service tax paid by him on his input services.
eg -
et us consider this example-

Vivek is an architect. He renders services to his client and collects the service tax amounting to Rs. 10,000.

He also uses the services of a CA who helps him in maintaining accounts and gives his tax advices. He pays Rs. 2,000 as service tax to his CA for such services.

He also purchases goods from a local supplier for his office. The supplier charges him VAT of Rs.500 on the goods purchased.

He has purchased few equipments directly from the local manufacturer who charged him excise duty of Rs.1000.

So here we have-

Output taxes collected - Rs.10,000 as service tax (collected by central government)
Input taxes paid-
Rs.2000 as service tax (collected by central government)
Rs.500 as VAT (collected by state government)
Rs.1000 as excise duty (collected by central government)

So now while paying the service tax of Rs.10,000 Vivek would ask the government for set off of all the taxes paid by him previously which comes to Rs. 3,500 (sum of all the input taxes above).

However, as mentioned earlier that Central and State governments are different entities, only set off of service tax and excise duty shall be allowed for paying service tax liability, as VAT was previously paid to the state government.

Thus, a set off of Rs.3,000 would be available, thereby making the net liability of Rs.7,000 as service tax.

This set off is nothing but CENVAT credit. Which in simple words would mean the set off of all the indirect taxes paid to the central government previously.

Hence, while paying excise, customs, service tax to the central government, these taxes if paid previously are to be allowed as set off against the net liabilities.

This is how it works.
pl correct me if i am wrong.

Name the standard stages of the sap payment run?

0 Answers  

---

What is meant by framework? Is the framework related only to automation or it is applicable to manual testing too?

0 Answers  

---

Hi to all, Plz tell me the inter-relation between SD,MM and FICO module. How they integrated in SAP. How they interact with other modules.Which fields are important for this purpose. Thanks

5 Answers   Bosch, Satyam, Tech Mahindra,

---

can we post input taxes during the making of down payment to vendors ex: down payment to vendor is 100000 on this the input tax is 10000 so we have to pay only 90000 for calculating like this what procdure we have to do kindly explain any one

4 Answers  

---

What is CIN? ? How many types there in CIN explain some one

1 Answers  

---

How is tax calculated in sap?

0 Answers  

---

can any one explain about Report Painter?

2 Answers   IBM,

---

what is company and company code?

4 Answers   Keane India Ltd,

---

How to change chart of accounts of company code after making several sales orders and delivery?

2 Answers   Genpact,

---

WHAT IS THE DIFFERENCE BETWEEN G001, G005 AND G067 FIELD STATUS GROUP ?

5 Answers   Alok Industries, Genpact,

---

How does partial payment differ from residual payment? : fi- accounts receivable

0 Answers  

---

What is a chart of depreciation? How does it differ from a chart of accounts? : fi- asset accounting

0 Answers  

---