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Service Tax applicability on Courier Services


Service Tax applicability on Courier Services, This article will guide you to know about how does the courier companies charge the service tax for the services they render and what are the exemptions available to them. These services are very much routine in day to day business, so we do not look at it whether they have charged any service tax and at what rate it is calculated. You will find all the details of Service Tax applicability on Courier Services same here.

Service Tax applicability on Courier Services

Service Tax applicability on Courier Services

Definition of Courier Agency:

Courier agency means any agency which is engaged in door to door transportation of documents, articles, goods utilizing the services of a person may be either directly or indirectly to transport or carry or accompany with such documents, articles or goods. Section 65(33) gives the definition of the courier agency.

The analysis of the definition says that the courier services would definitely include only those services where there is door to door service and not drop out facility. It should be hand to hand delivery. It should contain any of the things – documents, articles or goods. The definition of documents, articles and goods is not given any where, but it would definitely not include money which is to be given from one person to other.

Value of Taxable services:

The question arises that what amount would constitute the value of the services, whether gross amount or the net amount including other charges paid to sub contractors. The answer to it is the gross amount charged by any such agency from the customer for the service of door to door delivery.

Here the term gross amount charged would include any payment by mode of cheque, credit card, and the same may be made by way of adjustment or by way of transferring to suspense account.

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Exemptions in regards to charging of service tax:

There have been some special exemptions given to the courier agencies where they do not need to charge the service tax from the customers. They are:

  1. The services provided by the courier agencies to the diplomatic missions are exempt and there is no need to charge service tax. It has been notified by the government from the date 22nd January 1998.
  2. The service provided by courier agencies to the United Nations is also falling under the head of exemptions and there would be no service tax there on. The notification of the same was dated 22nd January 1998.
  3. Courier services provided by the post department of India such as speed post services or the express mail services have been made exempt as such services have been provided by the government where the motive is not to earn money but to provide services. It is also not a commercial concern, so there is no liability from the part of government. It would angadias service provide by the private concern where the motive is to earn profit.
  4. There would be no service tax for the co-loader as the services provided by the co-loader is not to the customer directly and it is routed through the main contractors.
  5. To boost the exports in the country and to bring foreign currency in India, government has provided special exemption for export of goods provided by the private agencies.
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About Yash Shah

Yash Shah is passionate article writer and has written more than 100 articles in the field of Finance, Insurance, Stock Market, Company Law, Auditing, Taxation and many others. In case of any queries or suggestions, you can reach the author @ [email protected], you can also catch him on facebook @ yashshah299

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