Service tax on security services

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 June 2013 Dear sir,

We need a clarification with respect levy of service tax on the security services which were are rendereing under the name of Akash Security Services Private Limited.(ASB).

ASB is a company which provide security guards to other companies and ASB will raise a bill on cost to cost basis, i,e IF a Company (X Ltd) wants 70 Guards then ASB will raise bill Only the Salary of that 70 guards.

The salary sturcture of ASB(Guard) is as follows :
1. Basic = 4500
2. DA = 2599
3. PF = 885
4. ESI = 295
5. Earned leave = 295
6. Weekly off = 1183
7. Uniform allow = 300
8. Supervisory allow =474
Total =10574

Till now ASB is paying Serive tax on Rs. 10574 @ 12.36 %

Now we are planning to minimise payment of service tax, so what we thought is let us raise bill only on the following components such as :
1. Basic = 4500
2. DA = 2599
3. PF = 885
4. ESI = 295

Total : = 8279

and for the balance amount 10574-8279 = 2295 , The X(Ltd) will pay directly to guard as a voucher payment(as staff welfare expenses ) with out reflecting in the books of ASB.

If we show in this way then we can minimise Service tax @ 12.36 % on 2295/- per guard.

So i request you to please give me your valuable feed back whether the treatment which we have planned is correct or wrong. Here we are paying total amount to guard but our intention is only to minimise payment of serive tax to the government.

If there will be any problem with respect to any law kindly give your valuable suggestion from both companies perspective, i,e from X Ltd and ASB.

CA.Vinita Gupta

CA.Vinita Gupta (Expert)
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11 June 2013 How can you show earned leave, weekly off and supervisory allowance as reimbursement?

You can shown fooding and conveyance as reimbursement by changing the nature of head. Uniform allowance can be shown as reimbursements