Transport

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This query is : Resolved

CA Mehta Ankur N. (Querist)

12 April 2013 Dear Sir,

If transporter charges 12.36% in it's bill, then also receiver have to pay 3.09% as per RCM ?

For Eg. Transport Charges Rs. 980, Service Tax on it is Rs. 122, Bill Amount Rs. 1102.

We have paid a total of Rs. 1102 for transport charges, then also as per reverse charge mechanism (RCM) we have to pay 25% of total Service tax ?

Transporter is having Service Tax no. which is for your reference only.

THanks in advance for your reply.

CA Neha Chauhan

CA Neha Chauhan (Expert)

12 April 2013 As per my opinion you have not to pay service tax under reverse charge mechanism...

Regards,
Neha Chauhan

Message likes : 1 times

CA Mehta Ankur N.

CA Mehta Ankur N. (Querist)

12 April 2013 No Ma'am i think 25% is to be paid by us as per RCM.

Thanks for reply.

CA Neha Chauhan

CA Neha Chauhan (Expert)

12 April 2013 Dont you think then it is a result in over burden on payer as he paid 12.36% to GTA and another 25% to gov....

Kindly give me reason on ur opinion.

CA Mehta Ankur N.

CA Mehta Ankur N. (Querist)

13 April 2013 Madam Department dont see from others perspective, it is rule that on RCM you have to pay 25% so that we have to pay, for overburden problem we have to contact transporter that you should not charge service tax.

Have a Good MOrning....

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

02 August 2025 Here’s a breakdown of the situation regarding Service Tax and Reverse Charge Mechanism (RCM) on transportation charges:

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### Scenario:

* Transporter charges Rs. 980 + Service Tax Rs. 122 (which is 12.44% approx) = Rs. 1,102 total bill.
* The transporter has a Service Tax registration number.
* The receiver (you) is wondering if you also need to pay Service Tax under RCM, which is typically 25% of the tax amount paid to the transporter.

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### Key Points on Service Tax and RCM for GTA (Goods Transport Agency):

1. **GTA Service Tax Liability:**
Under Service Tax rules (pre-GST), GTA is liable to pay Service Tax @ 12.36% on freight charges (excluding service tax itself). This is the tax included in the transporter’s bill.

2. **Reverse Charge on GTA Services:**
For GTA services, the recipient is liable to pay Service Tax on 25% of the value of taxable services received under RCM if the GTA is **unregistered**.

* **If the GTA is registered under Service Tax**, then **the recipient (you) do NOT pay any Service Tax under RCM.**
* The Service Tax paid by the transporter is full and final.

3. **In your case, since the transporter has Service Tax registration number and has charged Service Tax, you are NOT liable to pay any Service Tax under RCM.**

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### So, to answer your question directly:

* You **do not need to pay 25% of Service Tax under RCM** since the transporter is registered and charging Service Tax.
* The 12.36% Service Tax paid to the transporter is sufficient.
* Paying both will lead to **double taxation**, which the law does not require.

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### Important:

* The confusion arises because **RCM on GTA applies only if the GTA is unregistered.**
* If the GTA is unregistered, you pay Service Tax on 25% of the value under RCM and the transporter does not charge Service Tax.
* If the GTA is registered, only the GTA charges Service Tax, and recipient does not pay anything under RCM.

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If you want, I can provide you the exact rule or legal reference for this. Would you like that?

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