LABOUR CONTRACTOR

[Guest]

There is any difference Between Labour Contractor & Supply of Manpower.

What type of Service would be Selected for LABOUR CONTRACTOR (without material )- provide service of Construction of Residential Complex.

What is Service Tax code for that.

weather Same as Construction of residential Complex OR else

[KASTURI SETHI]

There is a world of difference between "Labour Contractor" and "Manpower Recruitment or Supply Agency Services". First difference is contractor provides multi-services whereas service provider under the category of "Manpower Recruitment or Supply Agency" can provide only one service meant for this category.

In case the contractor provides construction service for residential purpose (without material), his services will fall under the category of "Construction of Residential Complex" and NOT under Works Contact Service (WCS), it being pure labour. Similarly, if the contractor provides construction service for commercial purpose (without material), his services will fall under the category of "Commercial or Industrial Construction Services" and NOT under WCS, it being pure labour.If the contractor provides erection, commissioning,etc (without material), it will fall under the category of "Erection Commissioning and Installation Services" and NOT under WCS,it being pure labour. Contractor's service with pure labour can also fall under BAS. In such situations, the contractor will not be entitled to abatement and benefit of Reverse Charge Mechanism, it being out of WCS. Accounting Code for construction of residential complex is 00440334. Different accounting codes according to nature of service are to be used by the Contractor.

The provider of service under the category of "Manpower Recruitment or Supply Agency" plays the intermediary role between unemployed and employer-companies He performs various functions regarding supply of labour and jobs to the employer. Contractor can act as manpower recruitment or supply agency also but "Manpower Recruitment or Supply Agency " cannot play multipurpose role of contractor.

[Manoj Agarwal]

If the Labour Contractor provides pure service i.e. without material, the the service is outside the classification of Works Contract Service (WCS). As nicely explained by Sethi Ji, it can be classified as Construction of Residential Complex service or Commercial or Industrial Construction service or Erection, Commissioning & Installation Service (ECI) or Maintenance or Repair service; according to the actual activity.

However, it is pertinent to mention that if the service is not WCS, then the other classifications really doesn't matter because the erstwhile section 65 has become non-operative since 01-07-2012 and the classifications defined therein are resorted only for statistical purposes.

In case of 'Supply of Manpower Service', the labourer are employed by the service provider who work under the superintendence and control of the service receiver. Here, subject to conditions, reverse charge is applicable and thus the classification becomes very important. Again, w.e.f. 01-07-2012, the manpower recruitment is not covered under the supply of manpower service, so reverse charge is not applicable in case of manpower recruitment service.

[KASTURI SETHI]

Sh.Manoj Aggarwal Ji,

Sir, Thanks a lot for liking my reply. I also agree with you regarding additional views and comments. Discussion always enriches knowledge. TMI is the best platform for this purpose. Our doubts are cleared through this 'DISCUSSION FORM'

[Guest]

13.10.15

From:- jagannath prasad

Sethi ji

In case labour contractor ( service without material) gets registered under Residential complex services, what will be the method of valuation for payiong service tax. Will he get the benefit of 75% abatement which residential complex service provider get.

[Ganeshan Kalyani]

Dear Jagannath, you will not get the benefit of abatement. Abatement is only when the contract price consists of both material and labour portion. If you provide only labour service without material then certainly you will not be eligible to get the benefit of abatement.

AI Summary

Clarifying Distinctions: Labour Contractor vs. Manpower Recruitment Agency and Their Tax Implications Under Service Tax Rules A discussion on a forum addressed the distinction between a 'Labour Contractor' and a 'Manpower Recruitment or Supply Agency.' It was clarified that a labour contractor provides multiple services, often related to construction, and is not classified under Works Contract Service (WCS) when providing services without materials. Instead, these services fall under categories like 'Construction of Residential Complex' or 'Commercial or Industrial Construction Services.' The forum also discussed the implications of service tax classifications, abatement eligibility, and the reverse charge mechanism, emphasizing that pure labour services do not qualify for certain tax benefits.