Fapcci's interactive session on GTA service tax

The Federation of Andhra Pradesh Chambers of Commerce and Industry (Fapcci) held an interactive session with the Customs and Central Excise here on Thursday to clarify unsettled issues on the new Goods Transport Agency (GTA) service tax, which came into effect from January 1, 2005.

Expressing that the tax introduced was 'knotty', S Thirumalai, former president and advisor to the Central Excise and Customs Committee, Fapcci, said that the timing of the session was keeping in view that two weeks hence, industry would be filing their half-yearly returns and there were many issues unsettled even after nine months of the tax being enforced.

The GTA service tax was first introduced in 1997. It was later withdrawn in 1998 but reintroduced with the new Finance Act, 2004.

Explaining the salient features of the GTA service tax, joint commissioner, central excise, Hyderabad-II commissionerate, L Lakshmi Ram, said that only gross freight amount was to be taxed to the extent of 25 per cent of the freight amount, while the balance 75 per cent was not taxable, provided it was not availing the benefit of input or capital credit.

There is no service tax on transportation of fruits, vegetables, eggs or milk and if gross amount of goods carried does not exceed Rs 1,500.

C P Rao, Commissioner of Customs and Central Excise, Hyderabad-II Commissionerate, said that the definition of input and output services should be clarified along with the fact that the consignor or consignee, who pays freight will bear the burden of payment of service tax. Ram said that no penalty will be accorded to procedural lapses till December 31, 2005.