S. Tax payable on Freight advance

Hi,

We are a paper manufacturer. We send the goods to our customers. Usually, the transporters are not willing to carry the material stating that the customer delays the payment and all such excuses. 

Hence, we guarantee the payment to the transporter that we would make the payment on receipt of the proof of delivery. 

As such, we charge the freight payment in our invoice and show it as freight advance to the transporter.

 

Is Service tax payable on the freight advance? We are giving the customer the basic price and the freight is recovered by us instead of the transporter. 

 

Thanks !

Shelly. 

 

Replies (1)

Yes. Service Tax is payable.

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