Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 1-9-2011 Last Replied Date:- 30-12-1899 – Transportation & logistics is a much wider term. It covers various service providers and services provided by all modes of transportation (e.g., air, road, rail and sea). It also comprises related services such as warehousing, handling and value added services such as packaging, labeling, assembling etc. Transport service is used both as intermediate input and in final consumption. Also the transport equipments are subject to multiple taxation at both central and state levels. The present taxation regime leads to cascading effect of embedded taxes on the downstream industry (oil industry) which do not get rebated thereby leading to enha
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portation of persons by road transport. ii) Transportation of persons by rail. iii) Transportation of persons by air for domestic journey. iv) Transportation of persons by air in economy class for international journey. v) Transportation of persons by other than cruise ship from port in India. To rationalize the present indirect tax regime for transport services, the 13th Finance commission s Task Force has given some important suggestions: i) The tax on vehicles and the tax on goods and passengers levied by the state governments should be subsumed in the GST. ii) All transport equipments and all forms of services for transportation of goods and services by railways, air, road and sea must form an integral part of the comprehensive GST base
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only and that too restricted to classes other than economy class. Finance Bill, 2010 proposes to fully expand the scope of this service by bringing domestic air travel also in the net. The exclusion of economy class is also being removed and all classes of air travel will be liable to service tax as per the proposed change. As per departmental clarification, modalities of working out the tax amount including exemptions, abatement etc. would be prescribed at the appropriate time. Transport of goods through Railways, which was till now exempted from service tax will have to bear the burden of 10% service tax. It indicates that the government wants to take more and more services in the tax net before implementation of full fledged GST. Conclus
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