Labour contract

[Samik Chaudhuri]

Sir

Our manufacturing is going to engage Labour Contractor for supplying labour. I would like to know under RCM whether our company is bound to pay 15% of 75% or 15% of 100%. Please advice me.

With thanks

Samik Chaudhuri.

[SHIVKUMAR SHARMA]

Mr Samik

You have to pay15% of 100% under RCM.

[KASTURI SETHI]

Sh.Shivkumar Sharma Ji,

I want to know 15 % of 100% under which notification ?? There is every possibility that I may have missed some notification pl. Thank you.

[SHIVKUMAR SHARMA]

Respected kasturi Sir

Pls.Refer Notification No.30/2012 ST amended vide notification No.07/2015 ST dtd.01/03/2015.

[KASTURI SETHI]

Sh.Shivkumar Sharma Ji,

As per Notification No.7/15-ST dated 1.3.15 (Effective from 1.4.15) 100 % ST is to be paid by Service Receiver. There is no question of 15 % of 100. Do you agree ? Pl. comment upon.

[SHIVKUMAR SHARMA]

Respected Sir

The Query of Shri Samik Chaudhary is as Under :

Suppose Labour Charges is ₹ 100/-

15 % ST is to be Paid by them on ₹ 75 or ₹ 100 under RCM

Earlier before 01/03/2015.in case of Manpower supply ST was paid by service provider on 25% of Labour bill & service receiver was paid ST on 75% of Labour bill.

Now 100% service tax is to be paid by Service receiver only as per Not.No.07/2015.

[KASTURI SETHI]

Sh.Shivkumar Sharma Ji,

Thank you. O.K. Sir. The querist was not aware of Notification No.7/15-ST. More than one and half year has elapsed and he was not aware of the amendment. Anyhow, situation is clear to me.

[Ganeshan Kalyani]

Nicely replied. Thanks.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

I should have grasped the query in the first instance though the querist has not written the word, 'Rate of ST'. It is failure on my part as I took considerable time to understand.!!!

[Ganeshan Kalyani]

Sir, with due respect to all, I would like to mention that the question should have been drafted with little clarity. The querist has written "15% of 100%", it should have been "15% of 100% of Value of Service ". Then it would have been transparent. Sometime it happens that what querist is willing to ask is not what exactly written in the query. Hence I would request all those who are posting queries should post queries clear and complete. Thanks.

AI Summary

Reverse charge mechanism requires service receiver to pay full service tax on manpower supply under amended notification. Notification No.07/2015 ST (effective 01/04/2015) abolishes earlier apportionment for manpower supply and requires the service receiver, under the reverse charge mechanism, to pay service tax on the full value of supplied labour; previously tax had been split between provider and receiver with provider paying on a portion and receiver on the remainder.