Central Value Added Tax (CENVAT) Credit:
The Supreme Court, in a landmark judgment, has allowed telecom companies to claim Central Value Added Tax (CENVAT) credit for the installation of mobile towers and prefabricated buildings (PFBs).
- Central Value Added Tax (CENVAT) is tax credit system allowing manufacturers or service providers to claim a set-off on excise duty or service tax paid on inputs or input services used for manufacturing or providing output services.
- Implemented under the CENVAT Credit Rules, 2004, it replaced the Modified Value Added Tax (MODVAT). These rules define eligible goods, input services, and conditions for availing credit.
- It Prevents repeated taxation on the same value addition.
- It Reduces the tax burden on manufacturers and service providers.
- It Encourages businesses to reinvest savings in production and innovation.
- It Reduces the overall cost of goods and services by eliminating cascading taxes.
