input tax credit on manpower supply charges

[sachin shilamkar]

We are manufacturer wish to hire manpower for our manufacturing activity from outsource agency. Agency will comply with all statutory requirements. We will pay them service charges on the monthly manpower cost between 5% to 10%.

Bill will be raised as cost + service charges on monthly basis. Can you pls tell us that GST will be applicable only on service charges or on entire bill. Secondly can we get input tax credit of the GST charged on the same bill and utilize it against our GST liability for sale of goods manufactured by us.

[Ganeshan Kalyani]

GST is payable on transaction value. Transaction value means any amount payable by receiver of service to the provider of service. In my view GST would be payable on entire amount payable to manpower supply service provider.

Yes the credit is eligible. Thanks.

AI Summary

GST transaction value determines taxability, so GST applies to total manpower supply invoice and input tax credit is allowable. GST applies to the full invoice value charged by a manpower supply agency-personnel cost plus service charge-because transaction value covers any amount payable. The manufacturer-recipient may claim input tax credit of the GST charged on that invoice and use it against its output GST liability, subject to standard GST credit conditions.