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

AI Summary

IT company must apply service tax on total employee salary reimbursement and service costs, totaling Rs. 1,600,000. An IT company providing manpower to another company queries whether service tax should be charged on the total amount of employee salary reimbursement plus actual service costs or just on the service costs. The example given involves a reimbursement of Rs. 1,500,000 and service costs of Rs. 100,000. Respondents clarify that service tax should be applied to the gross amount, totaling Rs. 1,600,000, as the service provided is manpower supply without job responsibility, and the client supervises and controls the work.