TaxTMI 
TaxTMI 
Our labour contractor is suppling his own employed labour on cotract basis as per the agreemenet,whether these service is applicable for service tax?
Applicability of service tax on labour contract
03 Jan 2010 
10 Replies 
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Manpower supply service taxable when contractor employs and supplies workers; genuine works contracts are treated differently under service tax.
Supply of labour by a contractor who employs individuals and provides their services to a principal is treated as manpower recruitment or supply agency activity and is taxable because the employer-employee relationship is between the contractor and the individuals. If, however, the contractor is engaged to carry out a specific contracted task (a works contract), the arrangement is characterised as a works contract rather than supply of manpower and is treated differently for service tax purposes. (AI Summary)
Supply of labour by a contractor who employs individuals and provides their services to a principal is treated as manpower recruitment or supply agency activity and is taxable because the employer-employee relationship is between the contractor and the individuals. If, however, the contractor is engaged to carry out a specific contracted task (a works contract), the arrangement is characterised as a works contract rather than supply of manpower and is treated differently for service tax purposes. (AI Summary)