A private limited manufacturing firm sends its goods to other Pvt. Limited firm. Freight is paid by first private limited, and the said freight is reimbursed by second private limited firm after deducting TDS under section 194C.
(A) who will be liable to pay service tax.
(B) will the general exemption of 10 Lakh be allowed, if yes then how.
Total Amount deducted by second private limited under section 194C is in FY : 26 Lakh
How will exemption of 10 Lakh be allowed, will it be
(i) 26*25% = 6.5 Lakh will is less than general exemption of 10 Lakhs, no liablity to pay service tax.
Or (ii) 26 Lakh - 10 Lakhs = 16 Lakh .. 16*25%*12.36% ....
Pls reply......
Manufacturing firm liable for service tax on freight payments; exemption under section 194C not applicable due to RCM. A private limited manufacturing firm pays freight for goods sent to another private limited firm, which reimburses the freight after deducting TDS under section 194C. The discussion centers on who is liable for service tax and whether the general exemption of 10 lakh applies. It is clarified that the first private limited company, which pays the freight, is liable for service tax. The exemption does not apply under the reverse charge mechanism (RCM) for Goods Transport Agency (GTA). If GTA charges GST, reverse charge is not applicable. Liability remains with the freight payer post-GST implementation. (AI Summary)
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