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Service tax on freight forwarders on transportation of goods from India- (Ministry of Finance ) (12 Aug 2016)


Service Tax

Board has received representations regarding service tax on freight forwarders on transportation of goods from India. In terms of rule 10 of Place of Provision of Services Rules 2012, place of provision of service of transportation of goods by air/sea, other than by mail or courier, is the destination of goods. It follows that place of provision of the service of transportation of goods by air/sea from a place in India to a place outside India, will be a place outside the taxable territory and hence not liable to service tax. Provisions of Rule 9 of the POPS Rules 2012, should also be kept in mind wherein the place of provision of intermediary services is the location of the service provider. An intermediary has been defined, inter alia, in rule 2(f) of the POPS Rules 2012, as one who arranges or facilitates the provision of a service or a supply of goods between two or more persons, but does not include a person who provides the main service or supplies the goods on his own account. Freight forwarder, when acting as a principal, will not be liable to pay service tax when the destination of the goods is from a place in India to a place outside India.


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