Labour Supply By A Contractor

[Guest]

If a Labour Contractor, who is unregistered or registered in GST law supplies pure labour on contract basis and is liable for TDS, then how are they treated in GST law?

Does RCM applies over here on the part of Service Receiver or not?

Please elaborate or give a link to find this query explaining both cases i.e, incase of registered or unregistered Contractor.

[Rajagopalan Ranganathan]

Sir,

As per Sl. No. 10 & 11 of Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017 as amended only the following are chargeable to Nil rate. Otherwise service provided by labour contractor is liable to gst either under forward charge or reverse charge.

10	Heading 9954	Services provided by way of pure labour contracts of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works pertaining to the beneficiary-led individual house construction or enhancement under the Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana.	Nil	Nil
11	Heading 9954	Services by way of pure labour contracts of construction, erection, commissioning, or installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex.	Nil	Nil

[Guest]

What in case of Labours deployed for Civil Works?

[Rajagopalan Ranganathan]

Sir,

Sl. No. 10 clearly says nil rate is attracted in respect of "Services provided by way of pure labour contracts of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure."

[subramanian vijayakumar]

I endorse the expert rajagobalan sir viewd

[Nash Industries I Pvt Ltd]

It appears there is some clarity missing.

If my understanding of the query is right- It is the supply of manpower (by labour contractor).

The GST is payable by the labour contractor who needs to get registered and pay the GST. RCM is not applicable on supply of man power under GST.

TDS under Income Tax is applicable.

Regards

S.Ramaswamy

[KASTURI SETHI]

I also think so it is an issue of supply of manpower. What kind of work is being done by the supplied labour is another issue.

[Guest]

I have two queries as on the case explained before.

1. If Contractor is registered under GST and supplies Labour for civil work purposes like culvert works, then how is he treated., and incase if he is not registered under GST then how is he treated?

2. If the contractor is an service agency providing Security services ,then how is he treated if he is registered under GST law and incase if he is not registered under GST law.

** still my query is not satisfactory.

[Nash Industries I Pvt Ltd]

Depends on the nature/ wordings in the contract.

Regards

S.Ramaswamy

[KASTURI SETHI]

Dear Querist,

Query-wise reply is as under :-

1. There are two services involved -supply of manpower and construction service (pure labour). Pure labour to Govt. for construction/works contract is exempted but there is no exemption for supply of manpower to any Govt. State or Centre. GST has to be borne by the Contractor and not to be collected from Govt.

There are separate provisions for penalty for each type of offence. If any assessee is required to get registration and he does not get, all penalty will follow for non-registration, non-filing of return and non-payment of tax etc.

2. If contractor is registered for Security Service, he is to follow the procedure and pay GST. If not registered reply given above.

You cannot enter into contract/agreement with Govt. beyond the letter and spirit of GST law.

[Vamsi Krishna]

Both Labour supply and Security services are liable for GST if registered (except if ur services are as per Sl. No. 10 & 11 of Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017).

And There is no RCM (from 13th Oct'17 notification) for unregistered purchases. So you need not get registered if ur supplies are under exemption limit.

[Ganeshan Kalyani]

The clause mentioned by Sri Rajagopalan Sir in his reply clarifies what is exempted service in connection with manpower supply.

Further, both manpower supply and security agency service is under forward charge and supllier of service has to register provided his turnover is crossing the threshold limit.

Also, there is no reverse charge on recipient if purchase of goods or services is from an unregistered dealer.

[Guest]

Thank You all of you experts and especially SETHI Sir. I have found my answer.

[Ganeshan Kalyani]

Kudos to Sri Kasturi Sir. Receiving appreciation from querist is the remuneration for the expert's effort. Thanks Sri Sagar Ji for feedback.

[KASTURI SETHI]

Yes., Sir.When querist is happy and satisfied/convinced, my moral is high.

[Guest]

It is my great privilege to learn and share the information with all you respected Sir. It is a great source of Knowledge here. Thank you all!

[Rajeshwar Jaisawal]

I am registered, Contractor. and I supply labor to a company engaged in the cutting of vegetable and supply the cut vegetable to Pizza company. should i charge GST on my labor supply bill? please clrify

[Raj Pandey]

Labour contactor ko kyon sa gst file karna padega

[KASTURI SETHI]

Regular registration.

AI Summary

GST liability for labour supply: supplier liable under forward charge except nil rated pure construction; no reverse charge for unregistered suppliers. Labour supplied by a contractor is taxable under GST and the contractor must register and pay tax under forward charge when turnover exceeds the threshold, except that limited nil rate exemptions apply only to specified pure labour construction works for certain housing and single residential units; supply of manpower and security services remain taxable and there is no reverse charge on recipients for purchases from unregistered suppliers. Penalties follow non registration or non compliance, and TDS under Income Tax may separately apply.