Applicability of GST for Labour hired through a Labour Supplier

[Asked by Guest]

Would appreciate if we get a suitable guidance and clarification to a situation that we are facing presently regarding understanding the applicability of GST. In order to explain our issue, wish to elaborate as follows:

1. We are into execution of a Project a site which involves Erection and Commissioning of a solar power project.

2. We have been engaged by our Customer to carry out the said work. This involves we hiring labours supplied by a Labour Supplier Firm. They have a registered GST along with ESI and PF too. Now, the following typical working which we wish to list out to understand what would be the basis of computing GST payable:

(a) The Labours would be paid as per minimum wages = ₹ 450/-.

(b) ESI would be aound 4% on this which is payable.

(c) PF would be @ 12% plus 12% (Total 24%).

(d) Service charge payable to the Labour supplier is 10%, which we presume should be on ₹ 450/- and should not include the items under (b) and ( c) above.

(e) Finally once they Invoice us, the 18% GST (guess the rate is correct) payable should be on ₹ 450 + 10% (18% on ₹ 500/-) or should it include the total of ESI and PF payable too ?

(f) Further in such a case TDS deductible should be on which amount ?

We would be highly grateful if a clarity / guidance is given to us at the earliest please.

Thanking you all in advance..

AI Summary

GST on labour supply includes statutory benefits and service charges; taxed accordingly and TDS applied pre-GST.
Labour supply services are taxable as support services and the taxable value includes employer contributions such as provident fund and employee state insurance plus any incidental or service charges; these components must be added to the supplier's invoice for GST computation. TDS is to be deducted on the invoice value prior to GST, and GST is not levied on TDS while TDS is not deductible from the GST component. No deductions from transaction value are allowed except statutory tax components under the Act.