Central Value Added Tax (CENVAT)

The Supreme Court of India recently allowed telecom companies to claim Central Value Added Tax (CENVAT) credit for installing mobile towers and associated peripherals such as pre-fabricated buildings (PFBs).

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Key Highlights

• Mobile towers and pre-fabricated buildings are categorized as 'capital goods' or 'inputs' under the CENVAT Rules, 2004.
• Capital goods are tangible assets used in the production of goods or services but are not consumed during the process.

 

About CENVAT

• CENVAT is a system that allows manufacturers and service providers to offset their excise duty or service tax by utilizing input tax credits.
• The Central Value Added Tax (CENVAT) applies to excisable goods and services.
• Tax credits can be claimed for capital goods used in the production of goods and services.
• This mechanism helps minimize double taxation and improves the efficiency of the taxation system for manufacturers.