TaxTMI 
TaxTMI 
Service tax liability for a Sub contract from the Main contractor who is rendering Service to the Government.
06 Jan 2011 
3 Replies 
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Service tax liability: subcontractors remain taxable even where main contractor is a government-authorized agency and must remit tax.
Where a main contractor is an agency authorized by the Government and exempt under the statutory definition (as discussed under section 65(105)(zzzc)), that exemption applies to the government-authorized agency itself and does not extend to a subcontractor providing services to that agency. Consequently, a subcontractor must treat the services it supplies as taxable, collect service tax and remit it, unless the subcontractor independently qualifies for an exemption; administrative circulars cited support that subcontracted services are not automatically exempt. (AI Summary)
Where a main contractor is an agency authorized by the Government and exempt under the statutory definition (as discussed under section 65(105)(zzzc)), that exemption applies to the government-authorized agency itself and does not extend to a subcontractor providing services to that agency. Consequently, a subcontractor must treat the services it supplies as taxable, collect service tax and remit it, unless the subcontractor independently qualifies for an exemption; administrative circulars cited support that subcontracted services are not automatically exempt. (AI Summary)
One of my clients is a subcontractor of the Main contractor. The main contractor renders Surveying and Map making Services to the Government which is exempt. Whether the Subcontractor (registered under Service tax) needs to collect the Service tax and pay it to the Govt. Please resolve the query and give specific applicable notifications/Sections/Circulars as early as possible.