Service tax liability on freight
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
19 March 2012
Sir,
Please clarify SERVICE TAX LIABILITY ON FREIGHT paid by a Private Limited Company.
Please clarify SERVICE TAX LIABILITY ON FREIGHT paid by a Private Limited Company.
19 March 2012
there is no service tax liability on freight. freight charges are exempted.
Querist : Anonymous
Querist :
Anonymous
(Querist)
19 March 2012
Respected Sir,
MY SINCERE THANKS FOR YOUR EXPLENATION.
The service tax authority (at manjeri,malappuram,kerala) says that , in the case of freight paid by a company ,the service tax is to be paid the company and not by the transporter or the consigner.I am once again requesting to resolve my query.
MY SINCERE THANKS FOR YOUR EXPLENATION.
The service tax authority (at manjeri,malappuram,kerala) says that , in the case of freight paid by a company ,the service tax is to be paid the company and not by the transporter or the consigner.I am once again requesting to resolve my query.
24 July 2025
Got it, this is a classic confusion around **service tax on freight charges**. Let me clarify clearly:
---
### Service Tax on Freight — Who is liable?
* **Basic Rule:**
Service tax is **not charged on freight charges if the freight is for transportation of goods by road** except for certain specified cases.
* **Exemption:**
As per **Notification No. 30/2012-ST**, freight for transportation of goods by road is **exempt from service tax** if provided by a transporter registered with the Central Motor Vehicles Act.
* **When is Service Tax Payable?**
Service tax is applicable on **“Transport of Goods by Road Service”** only when the transporter is **unregistered** or in cases of **reverse charge** where recipient is liable.
---
### Who pays service tax if applicable?
* If freight service is taxable, under **Reverse Charge Mechanism (RCM)**, the **recipient of service (i.e., the company paying freight)** is liable to pay service tax, not the transporter.
* This explains why your local service tax authority says the company (freight payer) has to pay service tax under RCM.
---
### Summary Table:
| Scenario | Service Tax Liability | Who Pays? |
| ------------------------------------------ | ------------------------------------------- | ---------------------------------- |
| Freight by registered transporter (road) | Exempt | No service tax payable |
| Freight by unregistered transporter (road) | Taxable under RCM | Recipient (company paying freight) |
| Freight by other modes (rail, air, sea) | Taxable (transport of goods by other means) | Service provider |
---
### Important Points:
* Confirm whether the transporter is **registered and authorized** under the Motor Vehicles Act.
* If yes, then freight charges are exempt, and no service tax liability for company.
* If no, company must pay service tax under reverse charge.
---
If you want, I can help you prepare a note or communicate with your local tax officer to resolve this matter officially. Would that help?
---
### Service Tax on Freight — Who is liable?
* **Basic Rule:**
Service tax is **not charged on freight charges if the freight is for transportation of goods by road** except for certain specified cases.
* **Exemption:**
As per **Notification No. 30/2012-ST**, freight for transportation of goods by road is **exempt from service tax** if provided by a transporter registered with the Central Motor Vehicles Act.
* **When is Service Tax Payable?**
Service tax is applicable on **“Transport of Goods by Road Service”** only when the transporter is **unregistered** or in cases of **reverse charge** where recipient is liable.
---
### Who pays service tax if applicable?
* If freight service is taxable, under **Reverse Charge Mechanism (RCM)**, the **recipient of service (i.e., the company paying freight)** is liable to pay service tax, not the transporter.
* This explains why your local service tax authority says the company (freight payer) has to pay service tax under RCM.
---
### Summary Table:
| Scenario | Service Tax Liability | Who Pays? |
| ------------------------------------------ | ------------------------------------------- | ---------------------------------- |
| Freight by registered transporter (road) | Exempt | No service tax payable |
| Freight by unregistered transporter (road) | Taxable under RCM | Recipient (company paying freight) |
| Freight by other modes (rail, air, sea) | Taxable (transport of goods by other means) | Service provider |
---
### Important Points:
* Confirm whether the transporter is **registered and authorized** under the Motor Vehicles Act.
* If yes, then freight charges are exempt, and no service tax liability for company.
* If no, company must pay service tax under reverse charge.
---
If you want, I can help you prepare a note or communicate with your local tax officer to resolve this matter officially. Would that help?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Applicability of TDS on CFS, CHA fees, and shipping line charges
- Notice from IT DEPTT IF FD AMOUNT EXCEEDS 10 LACS
- Applicablity on tds
- Unable to generate and save json file for updated return
- GST payable under RCM
- LTCG offset against property buy
- Tax audit & Switching from Presumptive taxation
- Section 194I not showing in TDS RPU for Compnay Assessee for TDS on rent
- PRODUCT AND SERVICE CATEGORY CODE
- Eway bill requirement in case of retail sale of EV scooter
- Advance money given for supply of goods
- Import purchase entry
- Rule 54(1A) for Distributing ITC
- Received advance money for supply of goods but forfeited by us since full money not received
- EXCESS CREDIT REALTED GST REVERSAL
- Export invoice not reported
- CA Articleship Extension Matter
- GST OFFICER WRONG NOTICE
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
Trending Online Classes
-
LIVE Course on GSTR-9 & GSTR-9C (Technical | Practical | Concept - Based)
Sachin Jain03 November 2025
CAclubindia
