What is the tax implication on transportation charges when I incurred transportation charges on behalf of client, at that point of time we have paid service tax on transportation charges under reverse charge mechanism on the value of 25% .
but when we reimbursed it from client and show as sales at that movement whether we should charge service tax on it or not.
Ex.
Transportation charges paid to Goods transport agency Rs. 60,000 ST on value of 25%(i.e.60000*25/100*12.36/100) Rs. 1854
Sales bill to client Goods value Rs.5,00,000 Transportation sales Rs.60,000
20 March 2015
Dear Praveen It all depends on the agreement between you and your debtor.All expenditure incurred in connection with the transportion (if agreed) to be reimbursed by your customer you can very well debit his account for the total sum of Rs.561854/. The transaction of paying ST on sum paid to GTA is the only liability you need to pay. In your sales invoice transportation charges shall be entered as 61854 instead of showing it separately as ST on GTA
Thanks for suggestion, but sir my question is whether we need to charge service tax on Transportation charges @12.36% in the invoice, and we need to pay it to the Government.and there is no question of Service tax under reverse charge as it is not a GTA.
24 March 2015
Sir Thanks for your query. When you separately show transportation charges in your invoice you need to collect service tax on it. But you need not pay the same to the government as you can take cenvat credit of the sum paid on RCM. In your ST 3 return show the gross value of taxable service before abatement as 60000 and show abatements and show your tax liability as 1854 and claim cenvat of duty paid on Reverse charge basis
as if the assessee availed the cenvate then, he not entitle for abatement , as per rules, in such case he has to pay tax on 60000/- @ full rate and get cenvate of the amount paid on 25% 1854, means Rs 6600( 12.36% of the value of the services collected from the customer) -1854 = Rs 4746 , is it correct ?
CAclubindia
