Service Tax exemption on certain GTA Services

Government has fully exempted certain taxable services from service tax, provided to a goods transport agency (GTA) by their sub-contractors.  A notification, No.1/2009-Service Tax, to this effect was issued by the Department of Revenue, Ministry of Finance, here today. These services are generally used by the GTA during the course of transport of goods.  The specified services are :-

(i)                        clearing and forwarding agent service;

(ii)                       manpower recruitment or supply service;

(iii)                     cargo handling service;

(iv)                      storage and warehousing service;

(v)                       business auxiliary service;

(vi)                      packaging activity service;

(vii)                    business support service; and

(viii)                   supply of tangible goods service.

.          The tax on transportation of goods by road is on the gross amount of freight charges (after allowing abatement of 75%) which includes the expenditure incurred on above services.  Since no credit is available to GTA services, separately charging tax on these input services leads to double taxation, which would be mitigated now.