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.

[MUKUND THAKKAR]

As per my view service tax not applicable on bonus it part of salary. and salary is not attract any service tax .

[Abdul Razack Basha]

Service tax applicable for Manpower Agency for its invoice for Manpower wages as per act. The doubt is S.tax applicable for Manpower Agency for its invoice for Bonus payment.

[Mahir S]

The value of taxable service in relation to service provided by a Manpower recruitment agency to a client is the gross amount charged by such agency from a client in relation to the recruitment of manpower in any manner.

However, the expenses incurred by the manpower recruitment agency on behalf of the client which are reimbursed on actual basis are not includible in the value of taxable services.

AI Summary

Service tax on bonus: reimbursements treated as salary and excluded from taxable value; reimbursed expenses on actual basis not included. The bonus reimbursed to personnel is treated as part of salary and thus does not attract service tax when reimbursed; the taxable value of manpower recruitment services is the gross amount charged by the agency, but expenses incurred on behalf of the client and reimbursed on actual basis are excluded from the taxable value.