Housekeeping Services and supply of material therein

[Jignesh Shah]

Dear Expert, We are housekeeping service provider. We provide housekeeping services under a contract to various banks, insurance companies etc. As a part of the service, we provide housekeeping material as per the client's requirement. We bill separately for the housekeeping material for some of the clients where we provide some additional material like room freshners etc which is not a part of the contract. While we bill, we charge service tax on the same. The question is - in what category of service tax this bill will fall? We have a confusion whether it is BAS or OCS? We would be obliged to get clarity on the same. Regards.

[Rama Krishana]

Generally housekeeping services are in the nature of maintenance service and therefore to be classified as Repair and Maintenance (MMR) service. Regarding supply of some material, if you are purchasing and selling in the capacity of dealer, independent to service, the same should not be included in the gross value of taxable service. But, factually, to what extent are you able to prove, it is a question of fact.

[Ganeshan Kalyani]

The supply of cleaning material in incidental to housekeeping service and therefore should form part of consideration and accordingly service tax shall be levied on entire amount.

AI Summary

Taxability of incidental supplies: cleaning materials may be included in service consideration or treated separately if supplied as dealer. Classification and valuation of housekeeping services: routine housekeeping is characterised as Repair and Maintenance service, but supplies of materials may either be excluded from taxable service value if sold independently by the supplier as a dealer (subject to factual proof), or included as incidental supplies that form part of the service consideration and attract service tax on the entire billed amount.