Applicability of service tax - recruitment and supply of man power

[Asked by Guest]

There are two companies under same management. one company is using employees of other company. and in consideration paying sum of Rs. 2 lacs per year. whether this receipt is taxable under " recruitment and supply of man power" .

Since the amount is less than exemption limit, no service tax is applicable. If amount exceeds exemption limit it will be applicbale whether it is a group company.

Purpose and details analysis of situation would only assist to classify the correct category of taxable service. For an example, it might be "recruitment and supply of manpower" or "Business support" or "Business Auxiliary" or some other category. However, as long as your turnover is less that Rs. 8 lacs (Rs. 4 lacs for the F. Y. 2006-07) in the previous year, no need to worry.

AI Summary

Service tax applicability for intercompany manpower supply depends on service classification and whether exemption thresholds are exceeded.
Applicability of service tax on intercompany provision of employees depends on whether the service is classifiable as "recruitment and supply of manpower" or another taxable category and whether aggregate taxable receipts exceed the statutory exemption threshold; below that threshold no service tax is payable, while exceeding it triggers liability and compliance under the appropriate service classification.