Input service tax

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sushil

Manager

23 Points Posted on 04 January 2015

hi Friends,

Custom House Agent say Mr A has got an assignment for cleairng end to end of a consignment. Some part of it requires transportation to be done. For transportation Mr A gets it done by transporter B. Transporter B sends the invoice to A and charges service tax on transportation piece.

Now A sends the overall invoice to customer, Transportation expenses are charged to customer on actual basis based on receipts from Mr B. However A does not recover service tax on transportation component from customer. He only recovers service tax on agency charges from customer.

In this situation can Mr A take the benefit of input service tax which he paid to Mr B.

regards,S Kumar

Replies (3)

hiteshjain964@gmail.com

mumbai

74 Points Posted on 06 January 2015

What ever is the bill amount you would have charged you have charged service tax on it and by recovering transportation in your bill. You woould have recovered the service tax on entire bill amount. So automatically you have recovered the service on transportation. So yes you can do it and you have also done it

sushil

Manager

23 Points Posted on 06 January 2015

hi Hitesh,

Mr A is not charging the servcie tax on transportation component from the client. He is charging service tax only on agency charges. Regarding the transportation charges they are being billed on actual basis to client. In this case can the input service tax benefit be taken for service tax paid to Mr B.

e.g. Mr A gets invoice from Mr B regarding transportation as below

Transportation Charges : 1000

Service Tax : 123.60

So entry is :

Transportation Charges Dr 1000

Input Service Tax Dr 123.60

Mr B 1123.60

Now Mr B send the full invoice of clearing the consignment as below :

Customer Dr 2123.60

Transportation Charges Cr : 1000

Agency Charges Cr : 1000

Service Tax on Agency Charge Cr : 123.60

hiteshjain964@gmail.com

mumbai

74 Points Posted on 07 January 2015

Dear Sushil, Service tax is calculated on gross amount I.e. Rs 2000 and not on the service rendered by you I.e Rs 1000. So service tax calculation must on Rs 2000 which comes to Rs 247(approx). Yes u can service tax set off even if you have not recovered not transportation. Make next billing must be done on gross amount.