Tax on Tranportation Charges C & F Agent

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 January 2010 A clearing forwarding agent is paying service tax @ 2.5% on transportation from the port to his client.
Now the Ques is

1. whether he can mention in his bill the transportation charges and tax on it @ 2.5% to his client.

2.if yes then rate will be 2.5% or 12.5% because he is not a transporter....and agent also charge above the trasprtation charges paid by him.

3. credit can be taken on this income & exp

Kamlesh Chokhani

Kamlesh Chokhani (Expert)
Follow

30 January 2010 1. it seems that clearing and forwarding agent is taking reimbursement of transportation cost earned which in this case is tranporter charges paid by him plus service tax on transportation charges pais by him as recepient of transport services.

Clearing and forwarding charges is also liable to service tax at normal rate.

2.it dependos on terms of contract with clearing and forwarding agent what component of cost is to be paid. one thing is clear if he claims service tax it has to be at normal rate ( 10% pls cess)

3. Credit- amount charged at 2.5% is not service tax but he is claiming reimbursement of cost incurred. no credit can be availed. hoever if clearing and forwarding agent charges normal service tax at normal rate same is eligible for service tax credit subject to fulfillment of conditions of availment.

Thanks

kamlesh Chokhani