TaxTMI 
TaxTMI 
Our company has hired an employee through a recruitment agency on which he has not charged any service tax. Whether reverse charge would be applicable or not.
Reverse charge on manpower supply
20 Mar 2017 
13 Replies 
28065 Views Asked by
Reverse charge on manpower supply makes the service recipient liable to pay tax when personnel are supplied rather than employed.
Reverse charge applies to services by way of manpower supply, making the service recipient liable to pay service tax under the reverse charge mechanism where the arrangement constitutes supply of manpower and the supplied persons are not the recipient's employees. Pure labour contracts in construction are generally treated as construction services with the provider liable for tax and do not attract reverse charge. Supplier registration status does not negate recipient liability where the supply falls within the manpower supply notification. (AI Summary)
Reverse charge applies to services by way of manpower supply, making the service recipient liable to pay service tax under the reverse charge mechanism where the arrangement constitutes supply of manpower and the supplied persons are not the recipient's employees. Pure labour contracts in construction are generally treated as construction services with the provider liable for tax and do not attract reverse charge. Supplier registration status does not negate recipient liability where the supply falls within the manpower supply notification. (AI Summary)