Saturday, July 21, 2012

Reverse Charge : Goods Transport Agency Service changes wef 01.07.2012


on Saturday, July 21, 2012


As you know, Central Government vide Notification No. 36/2012-ST dated 20th June, 2012 has amended Rule 2(1)(d) of Service Tax Rules, 1994. The changes, applicable from 01.07.2012, inter alia include amendment in respect of Goods Transport Operator Agency Service. Team Do You Know Services has made an attempt to summarise these changes in tabular form produced below:-


S. No.Amendment with their implications
1.Change in the person specified as “person liable to pay service tax”, in the rule:

EarlierReverse charge was applicable,where the consignor or consignee of goods falls under specified category.Earlier if the consignor or consignee falls under the specified category and the freight is paid by individual then it is the individual who is required to pay service tax under reverse charge.

This hardship is now removed as reverse charge is applicable only when the person liable to pay freight falls under specified category.

(please see illustration 1 also)
w.e.f. 1/07/2012Reverse charge is applicable,where the person who is liable to pay freight falls under specified category.
2.Change in the “specified category”, as given in the said sub-rule:

EarlierAny partnership firm registered, by or under any lawW.e.f. 01.07.2012 provision of reverse charge is applicable even if person liable to pay freight is unregistered partnership firm.

w.e.f. 1/07/2012Any partnership firm whether registered or not under any law including association of persons.
3.Inclusion of a new proviso to the said rule:

W.e.f. 1/07/2012Provided that when such person is located in a non-taxable territory, the provider of such service shall be liable to pay service tax.The implications are explained with the help of an example as given in illustration 2.


Illustration 1: In relation to transport of goods by road the consignor and consignee are Mr. A (individual) and M/s. ABC Ltd (body corporate registered under Companies Act, 1956), respectively. As per mutual understanding of the parties Mr. A,the consignor is liable to pay freight to the goods transport agency.

Earlier: Since, the consignee M/s ABC Ltd. falls under specified category as mentioned in the rule, the person paying freight to GTA was liable to pay service tax under reverse charge under Section 68(2) of Finance Act, 1994. Accordingly an individual was required to take service tax registration andall the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service.

W.e.f. 1/07/2012: Since the person paying freight i.e. Mr. A (individual), is not a person who falls under specified category as mentioned in the rule, hence reverse charge provision is not applicable for such individual and service tax for the same shall be paid by the service provider under Section 68(1) of Finance Act, 1994i.e. GTA shall pay the service tax in such case.

Illustration 2: A goods transportation agency ABC located in Delhi transports a consignment of new motorcycles from the factory of XYZ in Gurgaon (Haryana), to the premises of a dealerin Jammu (non-taxable territory). Say, as per mutually agreed terms between ABC and XYZ, the dealer in Jammu is the person liable to pay freight. Here, in terms of amendedprovisions of rule 2(1)(d), since the person liable to pay freight is located in non-taxableterritory, the person liable to pay tax will be ABC. Accordingly, the place of provision ofthe service of transportation of goods will be the location of ABC i.e. Delhi.


Atul Kumar Gupta
B Com (Hons) FCA, FCMA, MIMA, CIQA, PGDEMM
Former Chairman NIRC of ICAI
Former Chairman NIRC of ICWAI
Author of “An Introduction to Service Tax”
Author of “Comprehensive Guide to Service Tax”
Mobile: 9810103611Email: atul@servicetax.net

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  1. Sir,

    before 30th June we use to pay service tax on GTA is 25% of Freight paid (75 % abd. we claim) from 1st July proc. is same or GTA is paid on 100 % of Freight paid. or in other words we can claim 75 % abd.claim or not from 1st July 2012

    Prashant
    9849748496

    ReplyDelete
    Replies
    1. YES 75 % abatement is there even from 01.07.2012 also same as old up to 30.06.2012.new abatement rates is available here

      http://www.simpletaxindia.net/2012/06/abatement-rate-in-services-tax-amended.html

      Delete
    2. YES 75 % abatement is there even from 01.07.2012 also same as old up to 30.06.2012.new abatement rates is available here


      Read more: http://www.simpletaxindia.net/2012/07/reverse-charge-goods-transport-agency.html#ixzz27eQ6SZ9j

      Delete
  2. Sir,

    Please tell me from 01.07.2012 account code for payment of GTA.

    Prashant.

    ReplyDelete
    Replies
    1. Same accounting code for all services is applicable from 01.07.2012 read details here

      http://www.simpletaxindia.net/2012/07/same-accounting-code-for-all-services.html

      Delete
  3. Sir

    "A" is a transporter, who is transporting Cement from the Works of Manufacturer "B" to their own godowns located in various districts. The freight is paid on monthly intervals by "B" to "A". The rates are fixed mutually destinationwise.

    Please inform, 1. What is the service tax payable
    2. Who is liable to collect and remit the same.

    Thanks and Regards

    ReplyDelete
    Replies
    1. In this Case Manufacturer "B" is liable to pay service tax ."B" is also eligible to claim 75% abatement from gross bill.

      http://www.simpletaxindia.net/2012/06/abatement-rate-in-services-tax-amended.html

      Delete
  4. if a partnership firm paid freight/transport chg. for Rs. 10,000/-. (1) How much service tax payable on freight/transport bill?
    (2) rate of service tax payable

    ReplyDelete
    Replies
    1. Service tax on 10000 will be 10000*25%*12.36%=309

      Delete
    2. Thanks for your early reply...

      can u tell me in which service tax head i have to paid service tax on transport bills, is it Business Auxiliary Services?

      and also tell me, should i claim the set off for the service tax paid on transport bill.

      Delete
    3. Now ,all the services are covered under single head 4401089 so check the notification here

      http://www.simpletaxindia.net/2012/07/same-accounting-code-for-all-services.html

      Delete
    4. thanks...

      but, should i claim the set off on these payment and when i shall claim?

      Delete
    5. yes , if it is covered under input services then ,you can claim it in cenvat credit

      Delete
  5. SIR
    WE CHARGE GTA ABOVE 1500/- BEFORE JUNE-2012
    FROM JULY-2012 WHAT IS LIMIT NOTIFICATION NO.

    ReplyDelete
  6. is company is liable to paid service tax on office rent given to an individual?
    e.g. Company A is paid Rs. 25000/- per month Office Rent to Mr. X.
    My Question is given below
    (1) If service tax liability is to be paid by a company, how much the amount? and
    (2)The company can claim set off on these service tax payment?

    ReplyDelete
  7. Service Tax rate is 12.36% and it is service provider responsibility to charge service tax on rent .

    If company pays the service tax to landlord ,company can claim cenvat credit on it.

    ReplyDelete
  8. We have made payment to contractor for a total sum of Rs. 50,000/- during the period from May,2012 to Sep, 2012 towards electric fittings in our office (No payment more than Rs. 15,000/-). The Contractor raised the bill on 25/10/2012 for Rs. 1,15,000/-. Now, we have not deduct TDS on these transactions. My Question is.........

    (a) should we have to deduct TDS on Rs. 50,000/- @ 1% OR
    (b) TDS deducted on Rs. 1,15,000/- and
    (c) Interest rate on delay payment of TDS

    ReplyDelete
    Replies
    1. TDS is deductible on payment on credit ,which ever is earlier basis.

      so tds should be deducted on payment of 50000/-.Further on balance payment of 65000(115000-50000) ,tds is deductible if you have given credit to the form in your books .

      Interest is payable on delay as under
      1. 1% per month or part thereof form date on which tax deductible to actual tax deduction date .
      2. 1.5% per month or part thereof form date of deduction to actual date of deposit

      Delete
    2. Thanks a lot..........

      Please tell me, my first payment was Rs. 15,000/- on 25/05/2012. So, Due date of TDS deposit was 07/06/2012

      (a) should I pay TDS for the period from 08/06/2012 to 29/03/2012 OR
      (b) for Jun,2012 to Mar,2013 (for 10 Months)

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    3. it should be 25/05/2012 to 29/03/2012 means 11 months @ 1 % as you have not deducted the tax earlier and deducted only on 29/03/2013 and deposited on same day.

      Delete
  9. i am working with partnership firm. The Firm carring a business of trading of yarn and also commission agent. I paid service tax after deducting abatement amount from transporter bill (e.g. 10000 - 7500 = 2500 * 12.36% = 309/-). Now, i have to return file the service tax return before 15/04/2013. I download excel file from service tax website. As said above, the above firm is Service Provider as Commission Agent and also Service Receiver as they paid agn.service taken from transporter. My Question is....

    (1) In Excel Utility sheet for service tax return, should i select YES in A 10.2 (Service Receiver under section 68(2).
    (2) in A12.1, As i deducted abatement amount from transporter bill, should I sect Yes and if I sect Yes, in which notification number the above service receiver contain (014/2012-S.T. or 042/2012-S.T)

    i am waiting for reply.....

    ReplyDelete
    Replies
    1. First you have to create separate sheets for each service by adding it on a9 return sheet ,and enter specific services related data at respective service page.

      Further in case of GTA service

      select YES in A 10.2 (Service Receiver under section 68(2).

      10.4 no

      12.1 yes
      12.2 notification 26/2012

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    2. Thanks.....

      After adding sheet in a9, which head i have to select as i have paid transport charges as service receiver. In service tax paid challan i select code 00441089-1089

      (a) as i select Transport of goods by road/goods transport agency service OR
      (b) Other taxable services - Other than the 119 listed

      Delete
    3. you should add transport of goods by road .No matter in which code you have paid the service tax .

      further ,if you have not registered your self for GTA then you should apply online for amendment in st-2 as well.

      Delete