Exemption / applicable rates

[SHRIDHAR MOHOLKAR]

An PSU engaged in creating infrastructure works, is in the process of engaging an agency on contract basis for supply of Skilled / unskilled staff. Is this activity exempted from GST, if yes which clause and if not what is the rate of GST. Also please confirm whether Service receiver will pay the tax by deducting it from the agency bills or it is to be claimed by service provider and paid by him. Thanks

[KASTURI SETHI]

It is manpower supply and does not fall under Reverse Charge Mechanism w.e.f.1.7.17. No exemption is available. GST is to be paid by the supplier of service after collecting from the receiver of service.

[Ganeshan Kalyani]

Agency is providing a manpower supply service . It is taxable under forward charge . the agency has to charge tax on his invoice . If his turnover crosses threshold limit then only he will charge tax, otherwise not. Further, if his turnover is below the threshold limit you are supposed to pay tax under reverse charge. but that provision is relaxed till 31.03.2018. hence no need to pay tax if agency is unregistered.

you can take credit of the tax charged by the agency .

[KASTURI SETHI]

Any PSU must be above threshold exemption limit.

AI Summary

Manpower supply taxable: supplier must charge GST unless below threshold, otherwise recipient may be liable under reverse charge. Manpower supply by an agency to a PSU is taxable and not exempt. The agency should charge GST under the forward charge mechanism and remit it after collecting from the service recipient. If the agency's turnover is below the threshold and it is unregistered, reverse charge may render the recipient liable, subject to an administrative relaxation noted in the discussion. Recipients may claim input tax credit for tax charged. PSUs are generally above the threshold and agencies should normally charge tax on invoices.