Applicabilty of full reverse charge to Manpower supply service

[THESINGARENI COLLIERIESCOLTD]

As per the amendments made in the Union Budget 2015, full Reverse Charge has to be applied for Manpower Supply Service and reduction in abatement for GTA Service from 75% to 70% from 01.04.2015.

In this regard, please arrange to clarify on applicability of amended provisions for the following transactions.

1. Work completed on or before 31.03.2015 -

a. Invoice raised after 01.04.2015 and payment also made after 01.04.2015.

b. Invoice raised before 31.03.2015 but payment made after 01.04.2015.

2.Work completed after 01.04.2015 but invoice was raised and payment was made before 31.03.2015.

[venkat eswaran]

U said from effective from 1.4.15 but this is effective date not mentioned in the budget. first FB 2015 to be passed in the parliament and President has to approve it after that separate notification will come then only it will come into force.

venkat

[Mahir S]

Sir,

With effective from 01-04-2015, 25% of the Service tax which was earlier liable to paid by service provider will be shifted in the hands of service recipient, thereby increasing the effective Service tax liability to be paid by service recipient from 75% to 100%.

For your clarification on the points raised in your query, please refer rule 3 and 7 of Point of Taxation Rules, 2011.

[Ramanujam Varadarajan]

Full reverse charge on manpower supply service or security service would come into effect from 1.4.2015. In case of services completed and bill raised prior to 1.4.2015, service provider would be required to deposit service tax at 25% in terms POT rules. If payment relating to such instances is paid after 1.4.2015, liability of 100% service tax under reverse charge would apply in the hands of recipient.

One suggestion is while effecting the payment for invoices relating to such services raised prior to 1.4.2015, but paid after 1.4.2015, recipient can obtain a declaration from the service provider that 25% service tax is deposited in such cases and deposit service tax at 75% value. If invoice itself raised after 1.4.2015, recipient can inform the service provider that service tax under reverse charge at 100% would be payable by them.

AI Summary

Reverse charge for manpower supply shifts full service tax liability to recipient when payment follows the legislative amendment. Full reverse charge shifts full service tax liability for manpower supply to the recipient from the amendment's effective date. If services were completed and invoices raised before that date, providers must deposit the portion chargeable under Point of Taxation Rules, but if payment is made after the amendment takes effect the recipient becomes liable for the full tax; recipients may request a declaration from providers that the provider's pre-amendment share was deposited to justify paying only the remaining portion.