Service tax in f.r.c.m
This query is : Resolved
20 February 2016
Dear Colleagues,
Under Reverse Charge Mechanism(R.CM),
Service Recipient is Government Entity(35% of State Govt. Subscribed Shares). We are Firm,Whether we have to Pay Service Tax(Under R.C.M) on Freight/Carriage Outward.
Under Reverse Charge Mechanism(R.CM),
Service Recipient is Government Entity(35% of State Govt. Subscribed Shares). We are Firm,Whether we have to Pay Service Tax(Under R.C.M) on Freight/Carriage Outward.
21 February 2016
yes you need to pay service tax under reverse charge system.
13 May 2016
Can We Avail the Cenvat Credit Paid on the Service Tax. as a Freight Outward
24 July 2025
Great question! Here’s the detailed answer regarding **Service Tax on Freight/Carriage Outward under Reverse Charge Mechanism (RCM) when the recipient is a government entity**:
---
### 1. **Is Service Tax payable under RCM on Freight/Carriage Outward?**
* Yes, **if the recipient of service is a government entity (like a firm where the government holds 35% or more shares)**, then the service tax liability on freight or outward carriage is on the **recipient under Reverse Charge Mechanism (RCM)**.
* So, your firm **has to pay service tax on freight service received** even if you are just a recipient.
---
### 2. **Can you avail CENVAT credit on this Service Tax paid under RCM?**
* **Yes, CENVAT credit can be availed** on the service tax paid under RCM on freight/carriage outward, provided:
* The freight service is used for business purposes, and
* The credit is not blocked under any specific rules (e.g., blocked credits on personal use or exempted services).
* The credit should be taken in the CENVAT credit ledger and used for payment of service tax or excise duty as per usual rules.
---
### Summary:
| Question | Answer |
| -------------------------------------- | --------------------------------------------------------------------------- |
| Liability to pay service tax under RCM | Yes, if you are a government entity or firm with govt. holding as described |
| Credit of service tax paid under RCM | Yes, you can avail CENVAT credit subject to normal conditions |
---
If you want, I can also help you with the exact **section and notification references** related to this or with examples on how to book this in accounting. Would that help?
---
### 1. **Is Service Tax payable under RCM on Freight/Carriage Outward?**
* Yes, **if the recipient of service is a government entity (like a firm where the government holds 35% or more shares)**, then the service tax liability on freight or outward carriage is on the **recipient under Reverse Charge Mechanism (RCM)**.
* So, your firm **has to pay service tax on freight service received** even if you are just a recipient.
---
### 2. **Can you avail CENVAT credit on this Service Tax paid under RCM?**
* **Yes, CENVAT credit can be availed** on the service tax paid under RCM on freight/carriage outward, provided:
* The freight service is used for business purposes, and
* The credit is not blocked under any specific rules (e.g., blocked credits on personal use or exempted services).
* The credit should be taken in the CENVAT credit ledger and used for payment of service tax or excise duty as per usual rules.
---
### Summary:
| Question | Answer |
| -------------------------------------- | --------------------------------------------------------------------------- |
| Liability to pay service tax under RCM | Yes, if you are a government entity or firm with govt. holding as described |
| Credit of service tax paid under RCM | Yes, you can avail CENVAT credit subject to normal conditions |
---
If you want, I can also help you with the exact **section and notification references** related to this or with examples on how to book this in accounting. Would that help?
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