Goods Transport Agency (GTA) service is a misconception since its inception. The light of mess ignites more with its coverage under reverse charge mechanism.

As per the provisions applicable for GTA Service,

  • This service is covered under Reverse Charge Mechanism; therefore, the service tax liability is to be paid by the service recipient that being a manufacturer or a Service provider.
  • There is an abatement of 75%, therefore the service tax liability is payable on 25% portion

  • This being an Input Service, the cenvat credit of this service is also available.
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Now the general rule is that, the cenvat credit is not available when we are providing services availing the benefit of abatement. But this is applicable only on service provider and not on service recipient.

Therefore, the cenvat credit of GTA service is available to a service recipient even though the service tax under reverse charge has been paid after claiming abatement of 75%.

However, the Central Excise and Service tax department were constantly taking a view that the cenvat credit is not available as the tax is paid after claiming abatement. Or the recipient has to get an undertaking from the provider that they have not claimed the abatement.

This issue is set at rest. A new Notification no 08/2014 applicable w.e.f. 11th July 2014 has been introduced.

The amendment clarifies that the condition for non- availment of credit is required to be satisfied by the service providers only. Service recipient will not be required to establish satisfaction of this condition by the service provider.

(Author -CA Raman Singla, Partner- Indirect Tax Professionals, www.indirecttaxprofessionals.com ,Mail: caramansingla@gmail.com)

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14 responses to “Cenvat Credit on GTA Service- A dilemma solved”

  1. MITESH BAJAJ says:

    IF A COMPANY IS ENGAGED IN GTA SERVICE , CAN THAT COMPANY AVAIL CENVAT FROM OTHERS THAT THAN SIMILAR LINE SERVICE?

  2. Megha Agrawal says:

    Can a service provider avail abatement if in previous year he has claimed input tax credit?

  3. sandeep patil says:

    Dear sir
    GTA paid by service receiver on 25 % of bill Amt can claimed as CENVAT credit or not pls reply

  4. RJ says:

    Sir please help me out with your needful suggestions :
    We are engaged in business of Clearing & Forwarding (cfa) & GTA services combined in a single firm;
    We are paying service tax @ 12.36% on CFA bills & ST @ 3.09% on GTA bills(availing abatement of 75%). My query is that can we avail cenvat credit on input services against our CFA bills as we are also availing abatement of 75% on GTA bills?

  5. Jenish says:

    IS CENVAT credit available GTA paid under reverser charge after FY 2014-15?

  6. Suresh says:

    Yes the CENVAT credit can be taken

  7. sandeep says:

    if we are service receiver of transport of by Roadd of Rs 100 and paying service tax 12.36 % on 25% of 3.09/ i can utilize the paid amt ag. service tax liabilities

  8. Vijay says:

    If I rec. a transporter bill for Haridwar to Nepal , then would be GTA applicable or not, pls suggest

  9. Rama Krishna Munipati says:

    Thanks for the information sir….
    I have a question.
    Sir in case of GTA if service provider is a not registered person… Even then can service receiver is eligible for 75% abatement…???

  10. SANDIP KUMAR VERMA says:

    my co. is manf. co. but i have work branch office , we are paid rcm agst. GTA 25% .
    please give me answer how many condition to fulfill to take credit input .

    Thanks & Regards

  11. H K says:

    No, I believe you can take cenvat credit prior to 11 July 2014 also but you will have to prove that the service Provider has not claimed the duty.

    ….ie “Or the recipient has to get an undertaking from the provider that they have not claimed the abatement “(copied from above).

    Now, getting an undertaking letter from the Provider will no longer be required.

  12. B.Chackrapani Warrier says:

    Read. Thanks.

  13. jay says:

    but the same copied to another service in this budget, now in rent a cab services, SR has to pay 40% if SP is under abatement & 50% if not under abatement, which adds another burden on SR – to take an undertaking regarding abatement, from the SP.
    condition removed from GTA, but now included in this service –
    already RCM is a pain on the assessee, particularly partial RCM, now with added confusion.

  14. virender prabhakar says:

    Its conseequence is that prior to 11th July, the credit will not be available.

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