Transporter RCM
This query is : Resolved
10 April 2016
A company having service tax registration is a regular service tax assessee. It avails service from a goods transport agency. Further the transporter does not provide pan. Total payments do not exceed Rs.75000 per annum. Further every bill is less than Rs.30000. Please provide the different compliances required with regards income tax , service tax ( reverse charge mechanism ) , and declaration by transporter since he is owning less than 10 vehicles.
10 April 2016
TDS - No TDS is required to be deducted since the amount does not exceed the specified amount, also there is no need of declaration further no need of PAN also ( But suggest to obtain for Safer side)
Service Tax - It needs to be paid by the company (subject to consignment amount exemption) under RCM after abatement on Freight amount
Service Tax - It needs to be paid by the company (subject to consignment amount exemption) under RCM after abatement on Freight amount
10 April 2016
What is consignment amount exemption and what is the abatement applicable ?
11 April 2016
I read the exemption notification and abatement. No worries for service tax RCM upto Rs.750 per consignee. So my problem is solved. Thankyou experts
02 August 2025
Exactly! Here’s a quick recap for clarity:
* **Consignment amount exemption:** Under service tax rules, if the consignment value (freight) for a single consignee in a financial year is **up to Rs. 750**, then you are **exempted** from paying service tax under reverse charge on that freight amount. So, small shipments below this threshold don’t attract service tax liability on the recipient.
* **Abatement:** For Goods Transport Agency (GTA) services, the service tax is levied on **75% of the freight value** (i.e., 25% abatement is allowed). So, service tax is calculated on only 75% of the freight charges.
**In your case:**
* Since each bill is less than Rs. 30,000 and total payment is under Rs. 75,000 per year, and consignment per consignee is likely below Rs. 750, you may be exempt from RCM service tax on transport.
* No TDS deduction needed as per Income Tax since payments are below threshold.
* PAN of transporter not mandatory here but advisable to collect for record.
If you want, I can also help you with the exact notifications or circulars. Just ask!
* **Consignment amount exemption:** Under service tax rules, if the consignment value (freight) for a single consignee in a financial year is **up to Rs. 750**, then you are **exempted** from paying service tax under reverse charge on that freight amount. So, small shipments below this threshold don’t attract service tax liability on the recipient.
* **Abatement:** For Goods Transport Agency (GTA) services, the service tax is levied on **75% of the freight value** (i.e., 25% abatement is allowed). So, service tax is calculated on only 75% of the freight charges.
**In your case:**
* Since each bill is less than Rs. 30,000 and total payment is under Rs. 75,000 per year, and consignment per consignee is likely below Rs. 750, you may be exempt from RCM service tax on transport.
* No TDS deduction needed as per Income Tax since payments are below threshold.
* PAN of transporter not mandatory here but advisable to collect for record.
If you want, I can also help you with the exact notifications or circulars. Just ask!
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