Input Tax Credit on Freight

[Asked by Guest]

Our Company is Registered under Service Tax for Transport Services By Road, we are the Consignor/Consignee not the GTA, Can we Claim Input Credit on Services Received by us for paying service tax on freight. We are claiming Exemption under notification no.32/04 dated 12/03/04 i.e is 75% of the taxable amount.

[Ravi Chopra]

Yes, your compnay can avail the credit of input service while availing the benefit of exemption notification no. 32/2004. Only restriction is credit on input and capital goods.

[Snehal Kulkarni]

Central Government has issued notification No.29/2008-Service Tax, dated 26.06.2008 to exempt fully from levy of service tax on supply of transport vehicles (goods carriage) to a goods transport agency (GTA) to be used for transport of goods by road [section 65(105)(zzzzj) of the Finance Act, 1994].

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.

You can avail the Cenvat Credit on Inbound Transportation undoubtedly. But for outward transportation, please refer the ST Circular No 97/8/2007

AI Summary

Input service credit may be claimed despite transport service exemption, subject to restrictions on input and capital goods.
A consignor/consignee registered for road transport service tax can claim input service credit on freight while availing the transport exemption, subject to a stated restriction on credit for input and capital goods. Respondents also note that GTA charges receive partial exemption and that Cenvat credit is available on inbound transportation; outward transportation treatment requires reference to the relevant service tax circular.