labour contract

[mali chand agarwala]

i am an individual small manufacturer out sourcing 6 labours from a labour contracter (individual) What is ST law applied

[Rajagopalan Ranganathan]

Sir,

If the total turnover of your labour contractor is less than 10 lakhs during preceeding finanicail year or it is not likely to exceed ₹ 10 lakhs limit during current year then no service tax is payable. If his turnover is more than 10 lakhs, then your labour contractor has to pat service tax on 25% of taxable vaLUE AND YOU HAVE TO PAY SERVICE TAX ON 7\5% OF THE TAXABLE VALUE. VIDE nOTIFICATION nO. 30/2012-sT DATED 20.6.2012 AS AMENDED.

[Mahir S]

Sir,

In simple words - Under reverse charge mechanism, there are no service tax liability on Individual Small Manufacturers, so don't read too much and don't get confused with service tax matters. The more you read, the more confused you shall get.

Instead, Just concentrate on your business and the manufacturing aspect.

Best of Luck.

AI Summary

Service tax reverse charge: manufacturer may face liability if outsourced labour contractor exceeds turnover threshold under notification guidance.
Liability for service tax on outsourced labour hinges on the contractor's turnover: if the contractor qualifies as a small taxpayer below the turnover threshold, no service tax is payable; if the contractor exceeds the threshold, the contractor is liable on an apportioned taxable value and the principal manufacturer may incur a corresponding obligation under the reverse charge mechanism as set out in the cited notification.