Information about Applicable Service Tax....

[Guest]

Dear Team,

We are about to start Human Resource deployment and management services to the local units of manufacturing and service industry under a registered firm name Bigroof Management Services Pvt.Ltd.,Kindly provide applicable taxation details.Your help would highly be appreciated.

[Rajagopalan Ranganathan]

Gentlemen,

It appears from you narration the service to be provided by you will fall under the category "Management or Business Consultant's Service". It will attract service tax @14%.

[Guest]

Dear Sir,

Thanks for your earliest response.I am still confused who should pay the service tax whether the employer who makes contract agreement with us to obtain Human Resource Service or the contracting firms like us.If you could provide your contact number I would be very happy to contact you in this regard.

[S G]

Gentlemen,

I am inferring from your query that the company is a Pvt. Ltd. company and you will do recruitment consultant business in this case you will charge service tax in your bill to your client. Further, you will collect the service tax from its clients and its you liability to deposit the same on account of service tax with the department.

Further, as you mentioned that you are about to start the business; hence you may avail the benefit of threshold limit of ₹ 10 lacs.

Thanks!!

[Rajagopalan Ranganathan]

Sir,

Since you are providing Resource deployment and management service liability to pay service tax is on the service provider. If you are a new service provider who is providing the service for the first time you can avail small scale exemption provided if your turn over is not likely to exceed the limit of ₹ 10.00.000/- during the current financial year you need not pay service tax up to the value of ₹ 10.00,000/-. For this purpose you have to file a declaration with your Range Officer. Beyond that you have to pay service tax @14%. For next financial year you have to pay service tax from 1st April since you had crossed the limit of ₹ 10,00,000/- during previous financial year.

[Guest]

Dear Sir,

With your informative reply I could clearly understand that being the service provider our firm is liable to pay service tax.To elaborate more on this our billing structure would be like this.Suppose we provided 200 employees to a manufacturing firm under our payroll with an average salary of ₹ 8000/-PM,I would present a month bill of 200 x 8000=Rs.16,00,000/- and 8% Service charge which amounts to ₹ 1,28,000/- totaling Rs.17,28,000/- to the service receiver.Please educate us whether we have to pay 14% service tax to 16,00,000/- or to 1,28,000/-.Please feel free to provide other inputs relating to exemptions and deductions as we are very new to this.

[B. Naga Rami Reddy]

Sir,

Service Tax is to be paid on ₹ 1728000,(i.e on ₹ 1600000+128000). Who will pay the service tax whether the service provider or receiver will depend on the status of the service provider as per the contents of the Notification No.30/2012-ST

[Rajagopalan Ranganathan]

Sir,

As per Section 67 (1) (i) of finance Act, 1994 service tax chargeable on any taxable service with reference to its value shall. in a case where the provision of service is for a consideration in money, be the gross amount chargedby the service provider for such service provided or to be provided by him. Therefore you have to pay service tax @14% on ₹ 17,28,000/- . With due respects to the views of Mr. B. Naga Rami Reddy, in my opinion you are liable to pay service tax and RCM procedure is not applicable to you.

[B. Naga Rami Reddy]

Sir,

I agree with the views of Shri Rajagopalan Sir as the service is provided by a Pvt Ltd company.

AI Summary

Bigroof's HR services classified under 'Management Consultant Service' with 14% tax; small-scale exemption possible for turnover below 10 lakh. Bigroof Management Services inquired about applicable service tax for their upcoming human resource deployment services. It was clarified that their service falls under 'Management or Business Consultant's Service,' attracting a 14% service tax. The company, being the service provider, is responsible for collecting and depositing the tax. They can avail a small-scale exemption if their turnover doesn't exceed 10,00,000 in the current financial year. Service tax should be paid on the total billed amount, including service charges. The Reverse Charge Mechanism (RCM) is not applicable to them as a Pvt. Ltd. company.