CHARGING OF SERVICE TAX

[PANKAJ A]

Dear Madam,

We are a Proprietorship Firm, we are into Manpower Supply.

We Hire Employees on our Payroll and Supply to our Clients who are PVT LTD Companies.

While Billing to Them we charge them as per the details below:

1) Total Actual Gross Monthly Salary (Incl ESIC/PF/PT) 1000.00/-
2) Professional Fees (10% of (1)) 100.00/-
3) Service Tax (on Professional Fees Only). (14.5%) 14.50/-
Total Invoice Value 1114.50/-

We are paying the Service Tax Received by us on a regular basis from 1st April 2015.

Please let me know if this billing is right or not. As somebody told us that we should charge service tax on (1) ₹ 1100/- -and not only on (2)Rs. 100/-.

Our ST Consultant had asked us to charge on (2) only.

Awaiting a positive reply from your end.

Regards,
Pankaj A
[email protected]

[KASTURI SETHI]

Taxable Value in this case is ₹ 1100/- and Not ₹ 100/- See definition of 'Consideration' in Explanation (a) to Section 67 of the Finance Act.This is effective from 14.5.2015

[venkat eswaran]

Now Manpower supply service tax 100% payable by Service receiver only not by service provider

[KASTURI SETHI]

It is correct in Manpower receiver has to pay 100%.

[Ganeshan Kalyani]

Yes in case of manpower supply and the condition that provider should be individual/firm ane recipient should be a body corporate/company is fulfilled then the responsibility of payment of service tax shifts on recipient of the service as per notification 30/2012 as amended.

[Ganeshan Kalyani]

Also I agree with the reply of Kasturi Sir, the reimbursement portion also become taxable with effect from 14.05.2015.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

After going through your views in my confirmation, I am of the view that valuation method in respect of Manpower Supply remains the same though 100% Service Tax liability has been shifted to Service Recipient under Reverse Charge mechanism. This is also a reply to the query/doubt raised by Sh.. Venkat Eswaran in his comments dated 11.12.2015.

[Ganeshan Kalyani]

Yes sir i agree with you.

AI Summary

Manpower supply service tax: taxable value includes reimbursements and liability shifts to recipient under reverse charge. Manpower-supply services must be valued by including full consideration, including reimbursements and amounts corresponding to employees' gross salary, under the Explanation to Section 67; when provider is an individual/firm and recipient is a corporate body, the liability to pay service tax shifts to the recipient under the reverse charge mechanism while the valuation method remains unchanged.