Which provision applicable for service tax for bonus 14-15 to contractor.

[Asked by Guest]

Dear Sir,

We are manufacturing company Pvt Ltd. Our labor contractor is a proprietor he raise bill for bonus for the year 2014-15 on Oct-2015. So my question is which provision of service tax is applicable for this transaction because before 01.04-2015 the service tax % was 75 % and 25 % but from 01.-04-2015 onwards it is 100% for service receiver so.

In this transaction current provision is applicable ?

(2) Will we take credit of this service tax ?

Regards

Swapneswar Muduli

[DR.MARIAPPAN GOVINDARAJAN]

Current provision is applicable. Credit may also be taken.

[Ganeshan Kalyani]

I agree with Mariappan sir that present provision will be applicable. and it is understood that if there is nexus between the manpower employeed and the manufacturing activity the credit is rightly eligible.

AI Summary

Service tax applicability: current provisions govern contractor bonus payments; input tax credit allowed with demonstrable nexus.
Applicability of service tax to a contractor's bonus payment is governed by the current service tax provisions in force when the contractor issues the bill. Input tax credit for service tax on such bonus payments is permissible where there is a demonstrable nexus between the contractor's supplied manpower services and the taxpayer's manufacturing activity, supported by documentation showing the link to taxable output.