Finance Minister P Chidambaram on Thursday sought to allay fears expressed by traders, who have threatened to go on nationwide strike opposing the service tax, saying the tax is imposed on goods transport agencies. "There is no problem. Only goods transport operators have to pay the tax," he said on the sidelines of the IRADe-IIEF conference in New Delhi.
He said a person would have to pay 10 per cent service tax if the consignor or the consignee falls under one of the seven categories that have been notified.
The categories are -- factory registered under or governed by the Factories Act or company established by or under the Companies Act or corporation established by or under any law or society registered under Societies Registration Act or similar law or co-operative society established by or under any law or dealer of excisable goods, registered under the Central Excise Law or any body corporate established or a partnership firm registered by or under any law.
A section of traders led by Confederation of All India Traders have threatened to go on strike, apprehending that traders may also have to pay service tax. The finance ministry has clarified that unless a trader falls under one of the seven categories, he is not liable to pay the service tax.
Thus a trader sending goods to another trader or any entity outside those seven categories shall not be liable to pay service tax, even if the freight is paid by him. The present dispensation is similar to the method of collection of service tax prescribed in 1997 on goods transport operators.
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