GST QUERY # LABOUR COST DEBITED

[ABHILASH PANICKER]

Dear Sir,

We are a manufacturing Unit , using manpower on contract basis ( production & other supportive work ) and take the GST Benefit also .,

Query:-

1 ) We are hiring 0.5% to 1% extra manpower to checking Input i.e. supplier Quality issues (recommend by supplier only ) @ our factory premises and the labour cost amount debited to supplier.,

Know my query is that whether we charged GST on such debit amount or not.

Regards

[Ravinesh Sinha]

Proportionate ITC is reversible on the amount deducted from supplier leviable Or ITC involved in extra manpower should be reversed

[KASTURI SETHI]

Manpower supply is not under RCM. However, you are requested to elaborate your query for fool-proof reply. Post major terms and conditions of the agreement/contract executed with the Contractor. This will help to ascertain exact nature of the service and nature of relationship between both persons.

[Shilpi Jain]

Terms of agreement would be relevant in this case.

If the agreement is silent on this aspect suggested that GST is charged on this amount recovered from the supplier.

AI Summary

GST on recovered labour costs may require charging tax and reversal of proportionate input tax credit depending on contract terms.
Whether GST applies to labour costs debited to a supplier for extra manpower used to inspect inputs depends on transaction characterisation and contract terms. If ITC was claimed on manpower services, any recovery from the supplier may require reversal of the proportionate ITC. Manpower supply is generally not under reverse charge here, and the agreement's allocation of costs and supply obligations determines whether the recovery is a taxable supply requiring GST.