In a major relief to over 25 lakh truck operators in the country, the government on Thursday exempted them from payment of service tax on supply of vehicles to goods transport agencies. In a statement, the finance ministry said truck operators would be fully exempted from levy of service tax on supply of vehicles (goods carriage) to a goods transport agency (GTA) for carrying goods by road.

The decision has been taken following a meeting between tax officials and representatives of All India Confederation of Goods Vehicle Owners Associations and All India Motor Transport Congress (AIMTC), which had threatened to go on a nation-wide strike on July 2 over the issue.

Unions said field officers of the service tax department were asking truck operators to pay 12.5% service tax after a notification issued on May 16 this year.

Following announcement in the Budget, the ministry had issued a notification last month making supply of goods carriage to the GTA liable for service tax. Welcoming the government's decision to exempt truck operators, Indian Foundation of Transport Research and Training head S P Singh said, "Since the GTAs already pay service tax, the truck operators cannot be asked to pay that tax as well."