tender floating issue

[Guest]

Hi,

Need clarification for Manpower tender to be floated including or excluding of ESI,PF & GST? Request reason as to why to include or exclude ESI, PF & GST?

[KASTURI SETHI]

Valuation (Service Tax) - Security Agency Services - Labour cost and contributions for ESI and EPF not excludible from Service tax

Commissioner of Central Excise, Madurai-2, Trade Notice No. 77/2005-STU, dated 13-10-2005

A representation has been made by Security Agency Association to the Ministry regarding exemption of the amount of wages of security guards and their contribution towards ESI and EPF from levy of Service Tax.

2. The matter has been examined by the Ministry. It has been clarified that Service providers who are liable to pay service tax are entitled to avail the credit of duty of tax paid under the CENVAT credit scheme on input goods and input services and utilize the said credit of payment of service tax. Service tax is levied on the gross amount paid by the recipient of service, which is the consideration for the service provided. Gross amount includes the value of input goods and input services and the total cost of labour to the employer. Service tax is leviable on all taxable services on the basis of the gross amount received and the cost of labour is an integral part of the value of service provided. Service tax being in nature of a consumption tax, ultimate service tax burden is on the consumer of services and not on the provider of service.

3. In view of above, the cost of labour and contribution towards ESI and EPF is not to be excluded from the levy of service tax on Security Agency Services.

4. This may be brought to the notice of all the constituent members of your Trade Associations.

[KASTURI SETHI]

2019 (25) G.S.T.L. 507 (Ker.) = 2019 (2) TMI 774 - KERALA HIGH COURT SECURITY AGENCIES ASSOCIATION Versus UNION OF INDIA

[PAWAN KUMAR]

as per my view, you need to consider esi, pf, bonus and gst also while making manpower tendering.

AI Summary

Service tax valuation: labour costs and ESI/EPF contributions included, affecting tender pricing and tax treatment. Valuation of Security Agency services must include the gross amount paid by the recipient; labour cost and employer contributions for ESI and EPF are not excludible from the taxable value. Service tax is charged on the gross consideration, including input goods and services and total labour cost, with ultimate burden on the consumer. In tendering for manpower, ESI, PF, bonus and GST should be accounted for in pricing.