Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Monday, August 6, 2012

Service Tax on Manpower Supply Services


As per the Service Tax Notification No. 30/2012 dated 20th June 2012, reverse charge mechanism of service tax has become applicable on a few services w.e.f. 1st July 2012, including manpower supply services. Under this scheme, service tax is payable to some extent by the service recipient instead of the whole amount being paid by the service provider. The service receiver has to register himself under service tax. Further, the service receiver cannot claim general exemption limit of Rs. 10,00,000, therefore he has to pay service tax even on a few rupees worth of service received.
Services provided or agreed to be provided by way of supply of manpower for any purpose are taxable under the service tax law, wherein 25% of the service tax payable will have to be deposited by the person providing service and 75% of the service tax payable will have to be deposited by the service receiver.
However, it is to be noted that the reverse charge is applicable only if the service receiver and the service provider satisfy a few conditions, which are as follows:

·         The service provider is an Individual (proprietor), or partnership firm (registered or unregistered) or an HUF.
·         The service receiver is any company formed or registered under the Companies Act, 1956 or a business entity registered as body corporate located in the taxable territory.

In case the abovementioned conditions are not satisfied, the service provider has to pay tax on the full amount of service.

Therefore, if a person (body corporate/company) is receiving services of manpower supply, then it must register itself for service tax. And, if it has already registered itself under the service tax act and is receiving these services, then it has to add this specific service in its service tax registration certificate.

Example: If manpower supply services worth Rs. 1000 are supplied by an individual, partnership firm or HUF, to a company or body corporate, service tax @12.36%*25%*1000 (Rs. 30.9) will be deposited by the service provider, and  @12.36%*75%*1000 (Rs. 92.7) will be deposited by the service receiver.
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22 comments:

  1. Chiranjeev SinghFebruary 18, 2013 at 2:42 AM

    What if service provider is a Pvt. Ltd. company?

    ReplyDelete
  2. pradeep chandJune 4, 2013 at 6:13 AM

    Service provider pay service tax on full amount

    ReplyDelete
  3. Hitarth DhebarJune 13, 2013 at 8:33 AM

    What if Service receiver is non resident ?
    Export of Man power service will be taxed for service Tax ?
    I have an employed a person who will supervise in Sri Lanka i.e. outside India. The employee and myself (partnership firm) are Indian resident. I guess this should be exempt from tax. Any suggestions ?

    ReplyDelete
  4. Suchi GandhiJune 25, 2013 at 3:56 AM

    what if the amount of service tax is not separately mentioned in the invoice? all other conditions being satisfied.

    ReplyDelete
  5. Darshana MhaskarAugust 11, 2013 at 12:40 AM

    does the company (service recipient)get 75 % or 25 % or 100 % input tax credit?????

    ReplyDelete
  6. mukta rawatApril 10, 2014 at 11:06 PM

    Which way service receiver can take credit of 75% amount ?

    ReplyDelete
  7. Ali ShaikhJune 17, 2014 at 5:30 AM

    If I am running a business from abroad will I am be tax payable if I then what will be the tax amount. recruitment services in Dubai

    ReplyDelete
  8. NobannoSeptember 10, 2014 at 6:38 AM

    For making customers happy the delivery services should do a lot of things. They should be punctual and should maintain good supply chain also. messenger service

    ReplyDelete
  9. shalini sharmaSeptember 7, 2015 at 3:43 AM

    if we raised a erection commissioning bill outside the india, so should we apply service tax on invoice....

    if yes why??????
    if no why???????

    ReplyDelete
  10. Gajanan khiraoJanuary 18, 2017 at 4:05 AM

    if i am providing manpower services ,Housekeeping and security services to services to Co-operative housing society then how will be services Tax to provider and receiver ??????????

    ReplyDelete
  11. Aaron CodyMarch 5, 2017 at 6:40 PM

    Thanks for sharing. I just want to know the latest service tax on Manpower Supply Services?

    ReplyDelete
  12. SHWETA GAIKARMarch 14, 2017 at 11:02 PM

    What if service provider is not register with Service Tax

    ReplyDelete
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    ReplyDelete
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    Very nice post. Thanks for the important information about man power agency

    ReplyDelete
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