Service tax under gta
This query is : Resolved
05 January 2016
Dear Experts,
We are in to clearing and forwarding business and transportation is the part of the same.
we generally procure transportation direct from the transporter and bill to our customer with some margin.
please suggest do we have to pay service tax as we are procuring the service direct from transporter or can we passed on the liability to the end user i;e the customer.
Thanks in advance.
We are in to clearing and forwarding business and transportation is the part of the same.
we generally procure transportation direct from the transporter and bill to our customer with some margin.
please suggest do we have to pay service tax as we are procuring the service direct from transporter or can we passed on the liability to the end user i;e the customer.
Thanks in advance.
05 January 2016
You cannot pass on the liability to the customer. Reason being the bill from the transporter will be on your name and even the payment will be made to you. Hence you will be liable.
05 January 2016
Thanks,,,.
Please suggest in case we had GTA registration, can we pay the service tax and claim cenvat for the same.
also in the same scenario if we don't have GTA registration can we pay and claim Cenvat.
Please suggest in case we had GTA registration, can we pay the service tax and claim cenvat for the same.
also in the same scenario if we don't have GTA registration can we pay and claim Cenvat.
05 January 2016
You can claim cenvat credit since its input service for u. U need to have gta registration
05 January 2016
Weather we have to provide separate invoice for the transportation or can we include transportation charges in our forwarding bill and mentioned the clause i.e Service tax payable by Consignor/Consignee.
25 July 2025
Here’s the scoop on your GTA (Goods Transport Agency) service tax questions in the clearing and forwarding context:
---
### 1. **Who is liable to pay service tax on transportation?**
* When you procure transportation services **in your name** (i.e., transporter bills you directly), **you are liable to pay service tax** on the GTA service.
* You **cannot just pass on the liability to your customer** by saying "service tax payable by consignor/consignee" unless the transporter has billed the customer directly.
* Since payment and billing happen through you, you are the service recipient and liable under the law.
---
### 2. **What if you have GTA registration?**
* If your business is registered under GTA service, you can pay service tax on the transportation service you procure.
* The service tax paid on procurement of GTA services can be taken as **CENVAT credit** (input credit), provided:
* You are registered under the service tax law.
* The transportation service is used for your business.
* This credit can be set off against your output service tax liability (e.g., forwarding services).
---
### 3. **What if you do NOT have GTA registration?**
* If you do not have GTA registration but are receiving GTA services, you are still liable to pay service tax **under reverse charge mechanism (RCM)** on the GTA services procured.
* You can also claim CENVAT credit on the service tax paid under reverse charge (subject to eligibility).
* However, it is advisable to get proper GTA registration for smooth credit and compliance.
---
### 4. **Invoice for transportation charges — separate or combined?**
* Ideally, transportation service invoices should be **separate** to clearly indicate the value and service tax on transportation.
* However, if you include transportation charges within your forwarding bill:
* You should clearly mention the **nature of service and service tax amount** on your invoice.
* You can mention a clause like **"Service tax payable by consignor/consignee as per law"** only if the law provides for it and the transporter has billed accordingly.
* Since you are the service recipient for GTA service, it's cleaner and compliant to have **separate invoices** from transporters.
---
### Summary:
| Situation | Service Tax Liability | CENVAT Credit Eligibility | Invoice Recommendation |
| --------------------------------- | ---------------------------------------- | ------------------------------------ | ---------------------------- |
| You have GTA registration | You pay service tax on GTA services | Yes, eligible to claim CENVAT credit | Separate invoice preferred |
| No GTA registration (RCM applies) | You pay service tax under reverse charge | Yes, eligible to claim CENVAT credit | Separate invoice recommended |
| Passing tax liability to customer | Not valid if transporter bills you | N/A | Not recommended |
---
If you want, I can also help draft the proper invoice wording or explain how to handle CENVAT credit accounting for this.
Would you like me to?
---
### 1. **Who is liable to pay service tax on transportation?**
* When you procure transportation services **in your name** (i.e., transporter bills you directly), **you are liable to pay service tax** on the GTA service.
* You **cannot just pass on the liability to your customer** by saying "service tax payable by consignor/consignee" unless the transporter has billed the customer directly.
* Since payment and billing happen through you, you are the service recipient and liable under the law.
---
### 2. **What if you have GTA registration?**
* If your business is registered under GTA service, you can pay service tax on the transportation service you procure.
* The service tax paid on procurement of GTA services can be taken as **CENVAT credit** (input credit), provided:
* You are registered under the service tax law.
* The transportation service is used for your business.
* This credit can be set off against your output service tax liability (e.g., forwarding services).
---
### 3. **What if you do NOT have GTA registration?**
* If you do not have GTA registration but are receiving GTA services, you are still liable to pay service tax **under reverse charge mechanism (RCM)** on the GTA services procured.
* You can also claim CENVAT credit on the service tax paid under reverse charge (subject to eligibility).
* However, it is advisable to get proper GTA registration for smooth credit and compliance.
---
### 4. **Invoice for transportation charges — separate or combined?**
* Ideally, transportation service invoices should be **separate** to clearly indicate the value and service tax on transportation.
* However, if you include transportation charges within your forwarding bill:
* You should clearly mention the **nature of service and service tax amount** on your invoice.
* You can mention a clause like **"Service tax payable by consignor/consignee as per law"** only if the law provides for it and the transporter has billed accordingly.
* Since you are the service recipient for GTA service, it's cleaner and compliant to have **separate invoices** from transporters.
---
### Summary:
| Situation | Service Tax Liability | CENVAT Credit Eligibility | Invoice Recommendation |
| --------------------------------- | ---------------------------------------- | ------------------------------------ | ---------------------------- |
| You have GTA registration | You pay service tax on GTA services | Yes, eligible to claim CENVAT credit | Separate invoice preferred |
| No GTA registration (RCM applies) | You pay service tax under reverse charge | Yes, eligible to claim CENVAT credit | Separate invoice recommended |
| Passing tax liability to customer | Not valid if transporter bills you | N/A | Not recommended |
---
If you want, I can also help draft the proper invoice wording or explain how to handle CENVAT credit accounting for this.
Would you like me to?
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