Service tax to be charged on which amount

[Vijay Chitte]

One of our IT company supplies of Manpower (IT related employee) to another company. We enter in to agreement and agreed that our employee seat and works at your premises, company will reimburse the employee salary which will actual basis and service tax charge on basis of actual service incurred by the another company. The query is service tax charge on reimbursement of employee salary + actual service incurred by another company? Or only on service incurred by another co.? Further explained by way of an illustration given below: ( X, IT company provide the employees to Y company for IT related work like maintains of software, modification, maintain data & back up etc. at premises of Y co. X co. is reimburse the employee salary is (whish is actual basis) Rs.1500000/- from Y company and Y company is incurred actual service is Rs.100000/-. My query is Service Tax chargeable on which amount? Is it Rs.1500000+100000=1600000/- or on only Rs.100000/-? Can any one guide me? Vijay Chitte

[Surender Gupta]

Service tax shall be paid on the gross amount i.e. on Rs. 16,00,000/-.

[Madhukar N Hiregange]

The service provided by you is only manpower supply as there is no job responsibility on you. The people would be allotted work based on the instrcution of client and would be supervised and controlled by them. You are only there to pay the salaries and take care of statutory dues. Value of taxable servcies would be 16 lakhs.

AI Summary

Service tax on gross amount applies to manpower supply, covering both salary reimbursements and service consideration. The document advises that where an IT company supplies manpower and the client reimburses employee salaries while also paying service charges, the supply is treated as manpower supply and the taxable value is the gross amount received, including both salary reimbursements and the service consideration.