Abatement Applicability on service tax on Goods transported by Rail

[PAWAN KUMAR SHARMA]

We are using the transportation by Rail mode and transporter is charging Full rate of service tax on the same.

[Alok Kumar]

 

Dear Mr. Pawan , i believe that 30% abatement will be vailable to you on the said services being provided to you.

please confirm with your service provider whether  he is availing  the cenvat credit or not.

also check whether your goods fall under the exempted category or not.

thanks,

 

alok

[Alok Kumar]

dear mr.pawan , the effective rate will be  30% of the value of services. In other words 70% value of the GROSS Value services will be exempted / and not taxed.

i correct my reply to this extent, and apologise for the inconvenience.

thanks,

 

alok

[YAGAY andSUN]

 

Service Tax FAQs - Kindly refer Appendix- 2 of Abatements

 

11 (zzzp) Transport of goods in containers by rail --- 30%

[dipsang vadhel]

1. if you are transporting by Rail, transporter is Railway. I suppose there is no service tax on Transporation of goods by Rail. Railway do not charge service Tax uptill now.

2. Perhaps you have appointed some contractor for handling some material for u and transporatation of material is in scope of vendor, The contractor is transporting material for u by rail. This vendor is charging service Tax on entire amonut of Railway freight. Precise reason for this could be that he is not providing you transportation service but provide you support service in relation to your business and is taxable as " Business Support services". In case of Business support service, No abatement is available &  contractor is required to pay service Tax @10.30% on entire value of such service. accordingly, The contractor is charging service tax form u.

Hope the above will help in analyzing the transaction.

AI Summary

Abatement for rail goods transport may apply, but vendor classification and cenvat credit affect service tax liability. Applicability of abatement on service tax for goods transported by rail depends on whether the activity is covered by the rail transport abatement entry and whether the transporter avails cenvat credit or the goods are exempt; if a contractor supplies ancillary business support services instead of direct rail transport, no abatement applies and the full value is taxable.