Input Tax Credit on Freight

[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

Company Can Claim Input Tax Credit on Freight Services with Exemption, Subject to Restrictions on Inputs and Capital Goods A company registered under Service Tax for Transport Services by Road inquired about claiming Input Tax Credit on freight services received, while availing an exemption under notification no. 32/2004. Two responses were provided. The first confirmed that the company could claim input service credit while benefiting from the exemption, with restrictions on credit for input and capital goods. The second response highlighted a notification exempting service tax on transport vehicles supplied to a goods transport agency, noting that service tax is applicable only on 25% of the amount charged for GTA services. Cenvat Credit on inbound transportation is permissible, with specific guidance for outbound transportation.