TaxTMI 
TaxTMI 
TaxTMI 
Service tax applicability - Service tax amount
Guest
A Pvt. Ltd. company is engaged in the business of providing service relating to custom clearing and freight forwarding. It do not have any license to work as CHA under customs Act. It engages the services of CHA's to get the work done of its clients. CHA's raises bill on this company which includes agency charges and other expenditures like examination fee, labour charges, documentation fees, transportation etc. The CHA's charge service tax only on the agency charges and not on other expenditures mentioned above. In turn it raises the bill on its customers by marking up in each of the expense head contained in the bill of CHA. Further, it also provides the freight forwarding service by hiring vassels from shipping line companies. Now the following question arises:- 1. Do this company requires to be registered under Service Tax. If yes, under which category. 2. While billing, It should charge service tax on whole of the bill or only on agency charges as done by CHA's. 3. Wheterh service tax is applicable on freight forwarding services. 4. If yes. Should it charge service tax on whole of he freight collected from its customers which includes freight paid to the shipping line also.
Company Queries Service Tax Duties for Freight Forwarding and Clearing; Exemptions for Pure Agent Expenses Explained. A private limited company engaged in custom clearing and freight forwarding services inquires about service tax obligations. The company uses services from Customs House Agents (CHAs) who bill them for agency charges and other expenses, charging service tax only on agency charges. The company questions if it needs service tax registration, the scope of taxable billing, and service tax applicability on freight forwarding. The response clarifies that services may fall under 'Clearing and Forwarding Agency services' or 'Business Support Services.' Expenses incurred as a 'pure agent' with proof are exempt from service tax, and CHAs must pay service tax on freight forwarding if conditions are met. (AI Summary)