Reverse charge

Save Share

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 June 2012 In reverse charge mechanism there is one line item "supply of manpower for any purpose"

So please let me know what is the definition "supply of manpower for any purpose".

RENGARAJ R.K

RENGARAJ R.K (Expert)

29 June 2012
“ Supply of manpower Service” means any service provided or to be provided to any person, by a manpower
recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or
otherwise, in any manner;
[‘Explanation.—For the removal of doubts, it is hereby declared that for the
purposes of this sub-clause, recruitment or supply of manpower includes services in relation to pre-recruitment screening, verification of the credentials.

For this service both service provider and service receiver are liable to pay 25% & 75% of the value respectively. For this purpose the SR should be business entity.

Querist : Anonymous

Querist : Anonymous (Querist)

29 June 2012 Thanks

You mean to say that the earlier definition will still applicable.

Further, my client is paying labour charges to many vendors so will it fall under reverse charge mechanism

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

22 July 2025 Great question! Here’s a clear breakdown regarding Reverse Charge Mechanism (RCM) and the “Supply of Manpower” under GST/Service Tax (depending on your jurisdiction and date):

🔎 What is “Supply of Manpower” under Reverse Charge?
It means any service provided by a manpower supply or recruitment agency to a client.

This includes temporary, permanent, or any kind of deployment of manpower.

It also covers pre-recruitment screening, verification, and related services.

Example:
If a vendor supplies skilled/unskilled workers or personnel to your business, that is “supply of manpower.”

⚠️ Who pays tax under RCM?
Earlier, as per Service Tax rules, tax liability was shared:

25% by service provider

75% by service receiver (if receiver is a business entity)

Under GST (which replaced Service Tax), RCM rules might be different, but typically, the recipient of manpower supply pays GST under RCM if notified.

💡 Does paying labor charges to vendors fall under RCM?
If the payment to vendors is for manpower supply or labor contract services, yes, tax is payable under RCM by the recipient.

This applies when the vendors are not registered or when the specific services fall under the RCM notified list.

Summary:
Question Answer
What is “supply of manpower”? Services by agency supplying/recruiting manpower, including temporary/contract labor
Is pre-recruitment screening included? Yes
Who pays tax under RCM? Typically, recipient (business entity) pays 75% or full GST depending on law
Paying labor charges to vendors – RCM? Yes, if it qualifies as supply of manpower or contract labor, tax under RCM applies

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now