Goods transport agents get tax exemption

Goods transport agents get tax exemption

Publication:Economic Times Delhi;
Date:Jun 27, 2008;
Section:Economy;
Page Number:18
Agents Won’t Have To Pay Service Tax On Renting Of Goods Carriage
Our Bureau NEW DELHI TRANSPORTERS hit by the hike in diesel prices have a reason to cheer. The government has exempted goods transport agents from paying a service tax on renting of goods carriage. The Centre on Thursday issued a notification fully exempting from levy of service tax the supply of transport vehicles (goods carriage) to a goods transport agency (GTA) which is used for transport of goods by road. This follows representations from the All India Confederation of Goods Vehicle Owners’ Associations and the All India Motor Transport Congress requesting the government to provide relief on levy of service tax on supply of goods carriage to GTA for use in transport of goods. GTAs often provide services for transportation of goods by road using the goods carriage obtained on rent or hire basis. They had sought relief on the ground that the service tax paid on renting or hiring of goods carriage could not be claimed as input credit for payment of service tax towards GTA service. Services provided by a GTA in relation to transportation of goods is leviable to service tax under GTA service. However, service tax for the GTA service provided is payable only on 25% of the amount charged for providing the GTA service and the balance amount is exempt from levy of service tax. In the view of this provision, GTAs were not entitled to take input credit under Cenvat credit scheme on goods and services used for GTA service. Moreover, the service tax for GTA services provided in seven specified cases is not required to be paid by the GTA service provider but by the person making payment towards the freight. In this year’s Budget, services provided in relation to supply of tangible goods for use, without transfer of possession and effective control, has been made as separate taxable service and this service has come into force with effect from May 16, 2008. Consequently, supply of goods carriage to the GTA, without transfer of possession and effective control, for using the said goods carriage for transport of goods by road becomes leviable to service tax. “Notification No.29/2008-Service Tax, dated 26.06.2008 exempts fully the levy of service tax on supply of goods carriage to GTA for use in transportation of goods by road,” an official statement said here.