Service Tax on Labour Contractor

[ANIL CHAUHAN]

Please advice minimum amount of service tax for payment to labout contractor

 

 

[YAGAY and SUN]

Earlier, it was 10.30% now,It is 12.36%.

[Harsh Jindal]

12.36% of the amount paid.

[sv bhasker]

You have to pay service tax at 12.36% on 75% of the value paid to labour contractor in terms of Notification No. 30/2012-ST

Service tax on labour contract is 12.36% only. However in case the service provider (the contractor) is an individual, an HUF or a Partnership firm then reverse charge mechanism shall apply and in that case the contractor shall charges 25% of 12.36% service tax in the bill and you have to pay 75% of 12.36% from your side. You may avail the input benefit for both the payments however in case the contractor has not charged any service tax in the bill then you will pay 75% of 12.36% as service tax and shall take the input credit of same amount.

[Avinash K]

Dear Friends,

 I need your  assistance, regarding the recent notification of Service Tax of 12.36%

 Based on recent notification of ST for Man power & Security Service supply.

75% to be paid by the service Receiver

25 % to be paid by the Service Provider

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My clarification is earlier we were paying 100% ST (12.36%) as service receiver & same were paying by our Service provider with his Reg. No

In recent bill we have asked to our service provider to give the break up of 75% +25% & we have paid as per break up.

but our service provider is willing to pay only his part  25 % ( as already claimed in his bill ) & rest of the 75 % , he is asking us the register & pay  by ourself.

My question is whether , we have to register & pay our Part ( 75 %) or we  will pay the 75 % of our part in that bill itself & advise to our Service provider to pay out the complete amt. ( Both 75 % + 25 % ) by giving break up

 

Pl. advice me , if anything is wrong or willing to contribute further

 

Thanks & Regards,

   Avinash

[CASeetharaman KC]

The requirement with respect to reverse charge mechanism is laid out by notification no 30/2012, dated 20.6.2012. As per this notification you need to pay service tax on 75% of the labour contract as a service reveiver whereas the service provider needs to pay service tax on 25% of the contract value. For this purpose you need to take registration and pay the relevant amount. Threshold limit of 10 Lakhs will not be applicable to you as service receiver and you can claim CENVAT credit only after the payment of the service tax on your 75% portion. This CENVAT can be taken on the basis of the challan, whereas in case of the 25% portion you can take CENVAT credit based on the invoice given to you by the service provider

[sv bhasker]

Dear Shri Anil

You have to register and pay service tax on 75% of the bill.

Mr Seetharaman KC has given correct reply. Please  follow it.

Sir 

what will be the liability of service tax i e 75% if advance is paid to contractor without receiving bill. 

[sv bhasker]

 

Sir,

paying advance will not alter the quantum of tax liabilty. It remains at 75%.

Dear Mr Khurana,

There shall not be any service tax liability on advance payment. As per the  Point of Taxation rules, the liability shall be with effect from the date of invoice after the change of service tax rates.

Thanks

[CASeetharaman KC]

As a service receiver, you need to pay service tax at 12.36% on 75% of the value paid to labour contractor in terms of Notfn No.30/2012-ST

[Vijay kumar]

Answering Mr. Ritesh Khurana - if advance is paid to the contrctor (service provider) by the company (service receiver), first it has to be seen whether conditions in Nofn.30/2012-ST are satisfied i.e. service provider is individual, HUF or partnership firm and receiver is a body corporate. If so, in terms of Rule 7 of the Point of Taxation Rules, 2011 the date of payment is the point of taxation in such cases and the receiver i.e. the company has to pay the tax on his part i.e. 75% of such advance @ 12.36% by 5th of the following month. Balance 25% will be paid by the service provider. If conditions under the said nofn are not satisfied, then the point of taxation is applicable only to the service provider (Rule 3) who has to pay 100% tax on such advance by the said date. Cenvat credit is available to the receiver in either case.

Vijay kumar

If construction company appoint a small contractor for painiting or plastering etc and contractor him self arrange labour :   labour are under the supervision of contractor and principal has no supervision or control over the labor 

then still it covered under the man power supply covered in notification no 30/2012

Thanks in advance

Ritesh khurana 

The 75% that needs to be paid has to be paid on our account (service tax number) or the contractor's? Does it matter

[Karthikeyan B]

Please advice whether we have to pay service to be paid on labour contractor where he is involved in manufacture of excisable goods. if so how much

AI Summary

Reverse charge on labour contractor requires service receiver to pay majority of tax; provider bears remaining share.
Reverse charge applies to specified labour contractor services: the service receiver must register, pay the receiver's portion of tax under reverse charge on a prescribed proportion of the contract value, and may claim CENVAT credit only after payment (by challan); the provider pays the residual portion and credits on its invoice. If the provider does not charge tax, the receiver still pays its share and may take input credit on payment. Point of taxation rules determine liability for advances when notification conditions are met.