As per service tax notification no. 1/2006-ST. Service tax should be 25% on freight would be attracted.
Ideally service tax should be 2.5% (10-7.5% = 2.5%), whereas many Vendors are charging 3.03%.
Could you please let us know the calculation, how he has arrived the service tax on fright.
If this is a case of Transport of goods by Road, charging of service tax at a rate higher than tha rate specified by government is not correct.
Please confirm whether your case is transport of goods by road or rail. As transport of goods in containers by rail was made taxable vide Notification No. 15/2006-S.T., dated 24.04.2006. Net rate of approximately 3% is applicable as 70% abatement is available on such services. In case the freight shown in the bills is covered under this category, service tax is correctly charged.
For information transport by Govt. Railway (except transport of goods in containers by rail) has been excluded from tax net vide notification No.33/2009-ST. This exemption was withdrawn vide notification 7/2010-ST, but Notification No.7/2010-ST itself has been amended several times for postponement of its effective date. Hence, as of now transport by rail (except transport of goods in containers by rail) will be taxable from April 2012.
Naveen Fintech Pvt Ltd
Kolkata
CA Inter
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Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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