SERVICE TAX APPLICABILITY ON PURE LABOUR CONTRACT

[Kunal Aggarwal]

Hi,

Please let me know SERVICE TAX APPLICABILITY ON PURE LABOUR CONTRACT. Individual having Wooden work on pure Labour Basis.

[Ganeshan Kalyani]

The service provider is liable to charge service tax @15% on pure Labour charges subject to availment of exemption of SSI limit.

[Mahir S]

Pure labour contracts are outside the scope of works contract as for classifying a contract to be works contract it is necessary that there should be transfer of property in goods involved in the execution of such contract which is leviable to tax as sale of goods.

[Ganeshan Kalyani]

The description on invoice should be apparently mention as 'Pure Labour charges' . Otherwise auditor attention may get invited to such transaction.

AI Summary

Service tax on pure labour contracts may apply unless small scale exemption; invoices should state pure labour charges. Service tax applies to charges for performing work under a pure labour contract unless covered by a small scale exemption; such contracts are not works contracts where there is no transfer of property in goods. Invoices should explicitly state 'Pure Labour charges' to reflect the taxable service and avoid potential reclassification.