Budget 2010-11 to look into problems on Cenvat credit

The government today said the Union Budget for next fiscal would look into the various problems being faced by companies under their Central Value Added Tax (Cenvat) credit claims. Cenvat rate is currently fixed at 10 per cent and companies get credit for tax paid on inputs under the scheme.

Many of the current problems would disappear when Goods and Services Tax (GST) gets operationalised as it was accrual-based instead of cash-based, a top finance ministry official said.

Addressing a conference organised by PHD Chamber, Central Board of Excise and Customs Joint Secretary Vivek Johri also said unending disputes were being generated in the area of cenvat credit in input services.

This was n respect of outward transportation, mobile phones, catering services, health insurance for staff, and repair and maintenance of residential quarters for staff.

Speaking on the occasion, PHD Chamber Indirect taxes Committee Chairman J K Mittal said  various anomalies in the cenvat credit rules had triggered an increasing number of litigations.