| # CENVAT credit This functionality is specific for India. A manufacturer can avail credit on the excise duty paid for raw materials, capital goods and the service tax paid on input services. The credit can be utilized to pay duty on final products and to pay service tax on output service. You can claim CENVAT credit for the tax paid for the following purchase transactions: On the inputs after the receipt of goods or at the time of invoice receipt. On the inputs after the invoices are issued by the Stage I and II dealers. Imported inputs. Capital goods on invoices issued by manufacturers or by Stage I or Stage II dealers. Imported capital goods invoiced. Input services. CENVAT credit can be utilized for the following transactions: Payment of duty on goods invoiced. When inputs or capital goods are removed AS SUCH. Payment of service tax. Maintain CENVAT credit pool CENVAT credit is claimed against the submission of excise invoice, Goods pass out document, bill of entry or any authorized document indicating the payment of duty. CENVAT credit is maintained in CENVAT credit pool as follows: Credit is available immediately after the receipts are confirmed in Warehouse Management or in Order Management. The details of the credit are maintained in Part II of the RG 23A or RG 23C registers for non-capital goods and capital goods, respectively. In case of capital items, the amount credited to CENVAT credit Available Account is based on the percentage defined in the India Localization Parameters (tccom9136m00l) session. For example, if the percentage defined is 50, the balance 50 per cent is credited to CENVAT Deferred Account. The same amount is transferred to CENVAT Credit Available account in the subsequent years, using Tax Category of the type Journal Vouchers. When the excisable goods are moved out of a warehouse or sold, the Excise duty payable account must be credited. Periodically, the excise dutyis paid using the CENVAT credit available account or PLA account. The payment to PLA is made through a TR6 challan in the Financials. Partial CENVAT credit In some organizations, the CENVAT credit can be availed partially and is known as partial CENVAT credit. The balance amount is considered as a non-claimable duty and is added to the inventory amount. The non-claimable duty is accounted as expensed tax. When the purchase invoice is registered, the tax amount represented by the claimable tax code is added to the CENVAT credit Available Account. You must use expensed tax code and claimable tax code for the same duty when you define the aggregate tax code to map the Partial CENVAT Credit scenario. CENVAT cross utilization CENVAT credit updated in the credit pool can be utilized to pay another duty as follows: Credit availed on Basic Excise Duty, Countervailing Duty, Special Excise Duty and Service Tax can be utilized to pay duty on the final product. Credit availed on Basic Excise Duty, Countervailing Duty, Special Excise Duty and Service Tax can be utilized to pay service tax on output services, except for an additional duty. Credit availed on CESS, Natural Calamity Contingency Duty, Additional Excise Duty paid for raw materials and also Countervailing Duty on imported goods, must be cross utilized only for payment of same duty. ECess paid on goods and services can be cross utilized. CENVAT credit on raw material is not available when the manufactured goods are exempted from duty. In India, service tax registration number must be linked to excise registration number. Credit amount related to service tax registration number can be cross-utilized for the payment of excise registration number tax amount. Therefore, you can select tax lines related to service tax registration number and excise registration number in the same tax declaration. However, you can link more than one service tax registration number to the same excise registration number. SHECess paid on goods and services can be cross utilized. Related topics ER1 report |