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Service tax on goods transport agencies from New Year

Our Bureau

New Delhi , Dec. 4

SERVICE tax on goods transport agencies will come into effect from January 1.

The Government, on Friday, issued four notifications prescribing the modalities for levy and collection of service tax on the goods transport agencies.

The notifications have been issued after taking into account the recommendations made by a committee, which was constituted by the Finance Ministry in September 2004, to examine and recommend appropriate mechanism/modalities for collection of service tax.

The move to bring these agencies under the service tax net was proposed in the Union Budget for 2004-05 on July 8 this year, but it hit a virtual roadblock on account of stiff resistance from the transporters who resorted to a nation-wide strike in August.

According to the notifications issued by the revenue department on Friday, service tax will be chargeable on 25 per cent of the gross amount charged from the customer.

The person making payment towards freight will be liable to pay the service tax in cases where the consignor or the consignee of the goods transported is one of the following: factory registered under or governed by the Factories Act, company established by or under the Companies Act, corporation established by or under any law, society registered under Societies Registration Act or a similar law, co-operative society established by or under any law, dealer of excisable goods registered under the excise law and any body corporate established by or under any law.

In other cases, the service tax has to be paid by the goods transport agencies. The Finance Ministry has also said that the agencies are required to issue a consignment note.

An official release said that service tax would not be chargeable on transportation of fruits, vegetables, eggs or milk. Service tax is also not chargeable if the gross amount charged on all consignments transported in a goods carriage is not more than Rs 1,500 or on an individual consignment is not more than Rs 750, the release said.

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