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Service tax for manpower supply

avinash chitnis (partner) (28 Points)

19 December 2014

i run a small manpoer supply organisation ( proprietior) i need to understand following things

do i need to take registration
if i take registration and pay full service tax my principal will pay , in that case do i need to bother about 75% and 25%
if i have to pay only 25% tax can i recover from pricipal employer

thanks

avinash chitnis

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9 Replies

Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 19 December 2014

1.You need to obtain registration on crossing the turnover limit of Rs. 9 lacs,however you may volunatarily obtain registration without crossing such limit.However, tax need to be charged only after crossing Rs. 10 limits.

2.As per Reverse chg notification no. 30/2012 , in case the service provider is an individual and service receiver is business entity registered as body corporate then , Service provider has to charge only 25% tax and remaining 75% to be paid to service eceiver.

Here, it is pertinent to note that , the liabiity of service provider to charge 25% arises only when he has crossed his small scale service provider exemp limit of Rs, lacs, but unlike service provider service receiver is liable to pay tax from Rs. 1 only.

Further, as per the Reverse notification the liability of service provider & service receiver is separate and independent of one another.So,they need to pay 25:75 strictly.

Pradeep Jaiswal (Article Assistance) (58 Points)
Replied 19 December 2014

Sir in this case, whether the service provider is eligible to take credit of his 25% share.

Kuldipsinh Jadeja (Job) (357 Points)
Replied 20 December 2014

Service Provider is liable to pay service tax. He cannot claim credit on service tax paid on output services provided but it is the service receiver who would claim credit of 25% service tax paid by it to the service provider.

Mukul (Service) (54 Points)
Replied 20 December 2014

& what about 75% share the service receiver has paid to the government..??

pankaj (student) (37 Points)
Replied 20 December 2014

In the above case if the service recipient paid 75% does he liable to take cenvat credit of the same.

MOHANDAS (ARTICLE) (23 Points)
Replied 21 December 2014

Yes...service receiver can take credit.

saraschandra (aticle assistant) (44 Points)
Replied 22 December 2014

We cannot take input credit which we are liable to pay.

Hence 75% which is paid by receiver cannot be taken for input credit

Manish K.Gandhi (Superintendent) (966 Points)
Replied 24 December 2014

As per Notification 30/2012-ST, when Manpower Service is provided by any individual, Hindu Undivided Family or partnership firm,AOP(Service Provider-SP) to a business entity registered as body corporate(Service Receiver-SR) , SP & SR will pay S.Tax in ratio of 25:75. If SP not crossed Threshold limit of Rs. 10 lakh, he is not required to pay S.Tax in terms of N/N 6/2005-ST amended by N/N 33/2012-ST. However SR has to pay his share of 75% and may avail Cenvat Credit in both case i.e. (25% paid to SR+75% paid by them) and (0+75%). However SP can not avail cenvat credit of S.Tax(25%) collected from SR.

After crossing 10 lakh, for the service provided to SR other than above SR(Body Corporate Business Entity), SP has to charge and collect full S.Tax and to deposit in Govt.