TMI BlogLABOUR CHARGESX X X X Extracts X X X X X X X X Extracts X X X X ..... In a company there is a contractors who is providing Labour to the company.The worker works under the direction and control of the Company and Company pay the Labour charges to the contractor. The contractors are only charging labour supply charges from the company without raising any Bill. The Company also deduct PF from the charges and deposit it in its own code. My question is - 1.Weather t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he company falls under reverse charge mechanism under Manpower supply services? Your views are much awaited. Thank You - Reply By CA ombir Singh Panwar - The Reply = There is a Change of Service tax liability structure from partial reverse charge to full reverse charge on manpower SUPPLY AND SECURITY services. The Notification No. 30/2012-ST dated 20-06-2012 has been amended vide Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication No. 7/2015-ST dated 01-03-2015 , there by shifting the Supply of Manpower and Security services from Partial Reverse Charge to Full Reverse Charge. The stated change will be effective from 01-04-2015.however in the present facts of the case labours are on payroll of the companyand hence no question of reverse charge mechanism is arise. - Reply By Mehul Pandya - The Reply = THANK YOU FOR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... YOUR REPLY If reverse charge is not applicable than please provide me some supporting circular, notice or any article. And if suppose company don't deduct PF then? - Reply By Mahir S - The Reply = As Labour is supplied to the company by the contractor and as the company pays the Labour charges to the contractor, therefore RCM shall be applicable and the Contractors are liable to get re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered with the company and charge and hence pay the service tax on the gross amount including Labour charges, PF, ESIC etc. - Reply By adithya dronadula - The Reply = Thanks - Reply By MUKUND THAKKAR - The Reply = Sir, The Company also deduct PF from the charges and deposit it in its own code, which has mandatory as per PF ESI rules, it don't means that labours are on payroll of comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any.therefore RCM shall be applicable pay the service tax to avoid litigation. - Reply By CA.Tarun Agarwalla - The Reply = The issue is here is to prove the relationships between the labourers and the company. If the same can be regarded as employer and employee then the same can never be a service .deducting PF and depositing in own code is under obligetuin of respective act.if it is the case t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen their is no service tax. However the charges being paid to contractor for arranging the labour will be under business support or auxlary service and taxable too. However no bill being made is beyond the discussion . thank you - Reply By Akash Deep - The Reply = Dear Mehul whosoever is doing this is in great trouble. Collecting consideration for service without raising invoice is an act whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch constitute fraud. For invocation of reverse charge mechanism, service provider must be individual, HUF of partnership firm and service receiver should be a body corporate. if it is not so reverse charge mechanism can not be invoked. Supervision and control of the service recipient is the sine qua none to treat the transaction as manpower supply as defined under Rule (2)(1)(d) of ST Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, 1994 . in this case contractor is an individual and receiver is a company. reverse charge is applicable. and service receiver i.e.company is liable to pay service tax to the extent of 100%. as labour charges ( i assume salary of the labourers) and labout supply charges (consideration retained by contractor for providing labour) is paid to the contractor only. Being so, question of emploe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r employee relationship between company and labourers does not arise at all.. As company is liable to pay tax to the extent of 100% contractor can easily charge a consolidated amount invlisive of salalry payable to labour and consideration for supply of labour. cionsideration the new explanation to section 67 definnfing term consideation, ampout of of ESIF and of and any other amount which c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontractors collect and paid tp government shall be included in the value of service. - LABOUR CHARGES - Query Started By: - Mehul Pandya Dated:- 12-6-2015 Service Tax - Got 7 Replies - Service Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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