Please advice minimum amount of service tax for payment to labout contractor
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Earlier, it was 10.30% now,It is 12.36%.
12.36% of the amount paid.
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.
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
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,
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
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.
what will be the liability of service tax i e 75% if advance is paid to contractor without receiving bill.
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.
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
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.
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
The 75% that needs to be paid has to be paid on our account (service tax number) or the contractor's? Does it matter