Service Tax on Bonus payment

[Abdul Razack Basha]

Dear Sir,

Please clarify the service tax applicable for reimbursement of Deepawali Bonus paid to the Man Power Supply Contractor. He is charging service tax on monthly bill for man power wages but he is not charging service tax for Bonus payment. Please clarify.

AI Summary

Service Tax Not Applicable to Deepawali Bonus Reimbursements as Part of Salary, Clarifies Query on Manpower Supply. A query was raised regarding the applicability of service tax on the reimbursement of a Deepawali Bonus paid to a Manpower Supply Contractor. The contractor charges service tax on monthly wages but not on the bonus. One response clarified that service tax is not applicable to bonuses as they are part of salary, which does not attract service tax. Another response noted that service tax applies to the gross amount charged by a manpower agency for recruitment services, but reimbursed expenses incurred on behalf of the client are not included in taxable services.