Freight paid to truck owners & machinery hire charges

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This query is : Resolved

Monalisha (Querist)

26 March 2008 Service Tax: Whether service tax is applicable on the firm or company on freight amount paid directly to truck owner through its driver in cash and where service of no transporter is engaged.
(4) A firm owning lot of machineries gives machineries on hire on hourly/daily/monthly basis to other firms. Whether service tax will be applicable on hire charges paid by the user of machinery. If service tax applicable, what will be the procedure as regards billing/deduction/payment as well as registration.

MANAS ROUT

MANAS ROUT (Expert)

26 March 2008 if you are paying directly the transport charges to a driver then no service tax liablity is there because the truck driver is a registered service tax payer.

Monalisha

Monalisha (Querist)

26 March 2008 DO YOU MEAN THAT IF FREIGHT IS PAID TO REGISTERED SERVICE TAX PAYER , NO SERVICE TAX LIABILITY ARISES IN CASE OF A FIRM OR CO , INSPITE OF CIRCULAR IN THIS REGARD????

Dayal

Dayal (Expert)

03 April 2008 If the freight amount is below Rs. 1500/- per consignment load, then service tax is not payable even if it is paid in cash

If the amount is above 1500/- then you need to pay service tax even if it paid directly to the driver, since this expense is booked by you under freight charges which is subject to scrutiny by the authorities and implication there on

Service tax is not applicable on higher charges as right to use is covered under VAT as of now.

In the recent union budget there is a reference of charging service tax on hire rentals, but so far it has not been notified, till such time you can relax and pay VAT @12.5% on hire charges received by you on the machinaries.

Should you need further inputs on this you can write back

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