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Service tax on tranport

S KUMAR (PROPRIETOR) (51 Points)

21 August 2014

One of my client is partnership firm paying the freight charges around Rs. 400000/- per year. As a recepient of service whether the firm is liable to pay ST. whether the threshold limit of Rs. 10 lakh is applicable to my client

Please clarify

Regards

S Kumar

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2 Replies

Venkatanarayana GM (Partner associate at Hiregange & Associates) (1279 Points)
Replied 22 August 2014

Dear Mr. Kumar,

Yes. Your client liable for Service tax under Reverse charge mechanism as per Section 68(2) of Finance Act 1944.

Further, 75% abatement can be availed on gross amount & remaining only on 25% Service tax needs to be deposited.

Further, This service tax amount whatever you discharged this can be availed as input service credit if the same is for Inward transportation. For outward also it is eligible subject to your contract with your customers.

There will be no basic threshhold limit for making payment under Reverse charge mechanism.

Also refer 25/2012 Service tax sl no 21 Notification and 30/2012 Service tax.

Thanks

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Gagan Deep Singh (CHARTERED ACCOUNTANT) (1190 Points)
Replied 22 August 2014

Where reciever is liable to pay service tax threshold exemption of Rs 10 lac is not available. Hence u will be liable to pay tax. But u can avail the abatement of 75%.