Service Tax on PF & ESI payments

[RAMESH ANANTHAKRISHNAN]

Dear Sir,

 

We are engaging contract labours for our production operation. We pay Rs.150 to the concerned contract labour and Rs.10 as service charge per person per day to the contractor. We pay Service Tax at 75% of the wage amount  @ 12.36% and contractor pays for the balance 25%. Apart from this we pay ESI & PF to the concerned departments based on Rs.150/-

Do we liable to pay Service tax for ESI & PF payment also?

 

Kindly clarify.

 

Regards

 

A.RAMESH

 

 

[GANTI SARMA]

You have to pay service tax on entire bill that means including ESI & PF.

AI Summary

Service tax on contractor payments includes employer contributions such as PF and ESI when billed as part of the contractor's invoice. Service tax liability extends to the full contractor bill for provision of contract labour, inclusive of statutory employer contributions such as Provident Fund and Employee State Insurance when these amounts are part of the contractor's invoice.