GTA on service tax

[Guest]

When a Goods Transport Agency (GTA) is hired by you for transporting raw material or finished goods or any other purpose relevant to business, liability to pay the service tax on the transport service received will be on the service receiver.

As per Service tax Rules, Services provided by a GTA in relation to transportation of goods is leviable to service tax under GTA service [section 65(105)(zzp)]. Service tax for the GTA service provided is payable only on 25% of the amount charged for providing the GTA service and the balance amount is exempt from levy of service tax.

Service Input Credit on Services Purchased

• If the Service Receiver pays the Service tax on the gross amount of GTA services received. He will be eligible to avail the input credit of the tax paid on the services purchased.
• If the Service provider opts for 75% abatement and pays the service tax on 25% of the Gross Amount GTA services received, then No Credit will be available

 Please quide,

presently it is any changes or stil continue.

[YAGAY andSUN]

If, the abatement is being availed by the service recipient then there is a condition associated with this option that No CENVAT credit will be available to GTA in terms of Inputs, Input Services and on Capital Goods.

For this, the service recipient is under obligation to get a declaration from the GTA that No CENVAT credit has been availed by him.

This is settled legal position. From 01-07-2012, it is now mandatory get the such declaration for future references, such as Audits etc.

[CASeetharaman KC]

Presently GTA services are covered under reverse charge mechanism which is covered by Notification no 30/2012 dated 20-6-2012 under which the  the person who is liable to pay the frieght  if he falls in any one of the following categories has to discharge the 100% service tax  liabiilty. The relevant portion of the notification is as reproduced below:

GTA services provided or agreed to be provided  by a goods transport agency in respect of  transportation  of goods by road, where the  person liable to pay freight    is,—

            (a)  any factory registered under or governed by the Factories Act, 1948 (63 of 1948);

            (b)  any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India;

            (c)  any co-operative society established by or under any law;

            (d)  any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder;

            (e)  any body corporate established, by or under any law; or

            (f)  any partnership firm whether registered or not under any law including association of persons;

AI Summary

Reverse charge on GTA services places liability on the service receiver in specified categories and limits credit eligibility. GTA services for carriage of goods are taxable with the recipient liable where hired for business; an abatement reduces the taxable portion but, if availed, precludes CENVAT credit on inputs, input services and capital goods and requires a declaration from the GTA confirming no credit availed. A notification applies a reverse charge mechanism making the person liable to pay freight (when falling in specified recipient categories) responsible for discharging the service tax, affecting payment responsibility and credit interactions.