All the services related to transportation of goods by road are exempted from service tax except the following services:
Goods Transport Agency (GTA)
Courier Agency
Meaning of Goods Transport Agency and Courier Agency
According to Section 65B (26) ‘goods transport agency’ means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.
According to Section 65B (20) ‘courier agency’ means any person engaged in the door-to-door transportation of time-sensitive documents, goods or articles utilizing the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles.
Exemptions for Goods Transport Agency
There are some exemptions available to Goods Transport Agencies are:
The services provided by the GTA in relation to transportation of fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage are exempted from payment of service tax.
If the gross amount charged for transportation of goods of a single consignee, does not exceed Rs.750/-, then such service is exempted from service tax.
If the gross amount charged for transportation of goods in a single vehicle (goods carriage) does not exceed Rs.1500/-, then such service is also exempted.
Who is liable to pay Service Tax under GTA?
According to Reverse Charge Mechanism, payment of service tax liability for the services provided by GTA is on the service receiver.
The consignor or consignee whoever pays the freight is liable to pay service tax if such consignor or consignee is any one of the following:
Any factory registered under the Factories Act,
Any society registered under the Societies Registration Act
Any co-operative society established under any law
Any dealer of excisable goods, registered under the Central Excise Act
Any Body corporate registered under any law
Any partnership firm or any association of persons whether registered or not under any law
Abatement for GTA services
As per Notification No.26/2012-Service Tax dated 20th June 2012, the service tax is payable only on 25% of the gross amount and abatement of 75% is allowed on GTA services.
Note: Now the abatement is 70%
Such abatement is allowed only if CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
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