LABOUR CONTRACTOR UNDER GST

[S.C. WADHWA]

We are in receipt of bill from labour contractor towards supply of labour in factory in Haryana. Since this labour contractor is registered in UP state, he is charging IGST in bill.

Whether this is correct. Please confirm.

[KASTURI SETHI]

Labour contractor should get himself registered in Haryana. Service is consumed in Haryana. CGST AND SGST are correct. IGST not applicable here.

[S.C. WADHWA]

Sir,

What is the reason to get registered in state of Haryana. If the labour contractor supplies labour in more than one state, whether he will have to get registered in each state.

Please clarify.

[Ganeshan Kalyani]

Sec 22 of cgst act 2017, provides for registration of a person in the state from where he provides taxable service. manpower service cannot be provided interstate. manpower has to be within the state. hence in case of manpower supply service the supplier of service has to be registered in the State from where he supplies taxable service.

[KASTURI SETHI]

Dear Querist,

Sh.Ganeshan Kalyani Ji, has rightly explained. This is what law speaks. At present there is no provision for centralised registration in GST Acts. The purpose behind registration in every State (where the service is supplied and consumed ) is that revenue meant for State Govt. should go to State where the service has been supplied and consumed. In such situation, if supplier pays IGST only, then the whole revenue will go to the Central Govt. Hence revenue loss to the State. For such situation Contractor can obtain registration as Casual Registered Person.

[S.C. WADHWA]

Thanks you all Sir for such useful information

AI Summary

Registration in state of supply: labour contractors must register where services are consumed and charge CGST and SGST.
Labour contractors must register in the State where manpower services are supplied and consumed; intra State supply of labour attracts CGST and SGST, not IGST. There is no centralised GST registration-contractors supplying in multiple States must register in each State of supply or use casual registration where applicable to ensure tax accrues to the State of consumption.