Reverse charge mechanisism on recruitment consultants
This query is : Resolved
25 July 2013
Hi,
Please help me whether reverse Charge is to be followed in case of recruitment Consultants. As their is no clear definition of manpower supply in the new service tax rule. Please also give reference for your reply
Please help me whether reverse Charge is to be followed in case of recruitment Consultants. As their is no clear definition of manpower supply in the new service tax rule. Please also give reference for your reply
28 July 2013
Only supply fo manpower is under Jt charge.
If you are provding recruitment services then no jt charge- you need to charge the full ST.
If you are provding recruitment services then no jt charge- you need to charge the full ST.
29 July 2013
Thanks Sir,
but Manpower supply Service is no where defined in negative list and reverse charge mechanism and as per Section 65, Recruitment Services is clubbed with Manpower supply Service vide TRU letter letter no B1/6/2005 dated 25/07/2005. So should We Refer Section 65 or go by plain reading of Reverse charge Mechanism. Please Help on the same
but Manpower supply Service is no where defined in negative list and reverse charge mechanism and as per Section 65, Recruitment Services is clubbed with Manpower supply Service vide TRU letter letter no B1/6/2005 dated 25/07/2005. So should We Refer Section 65 or go by plain reading of Reverse charge Mechanism. Please Help on the same
22 July 2025
Here’s a clear explanation about reverse charge applicability on recruitment consultants/manpower supply services based on your conversation:
Key Points:
Manpower Supply Service vs. Recruitment Service
Manpower supply service means providing manpower (temporary or otherwise) to a client by a manpower supply agency. It includes services related to recruitment, screening, verification, and supplying personnel to work under the client.
Recruitment service generally means just providing recruitment (searching, screening, and referring candidates), not actual supply or deployment of manpower.
Reverse Charge Applicability
Reverse charge (joint charge) is applicable only on supply of manpower service where the client (service recipient) is liable to pay 75% of service tax and the service provider 25%.
Pure recruitment services are not covered under reverse charge; here, the recruitment consultant/service provider charges full service tax and the recipient does not pay under reverse charge.
Reference
As per Section 65 of Finance Act, 1994 and TRU (Tax Research Unit) letter no. B1/6/2005 dated 25/07/2005, recruitment services are clubbed with manpower supply service for service tax purposes.
However, reverse charge is notified only on supply of manpower service, not on pure recruitment.
Summary:
Service Type Reverse Charge Applicable? Service Tax Liability
Manpower supply (deployment of manpower) Yes (joint charge - 75% on recipient) Recipient pays 75%, supplier pays 25% under joint charge
Pure Recruitment Service No Supplier pays full service tax
What to do?
If the vendor is only providing recruitment services (candidate search, screening, no deployment), then you do not pay tax under reverse charge; vendor charges full service tax.
If vendor is supplying manpower (providing personnel to work under you), then reverse charge applies.
Key Points:
Manpower Supply Service vs. Recruitment Service
Manpower supply service means providing manpower (temporary or otherwise) to a client by a manpower supply agency. It includes services related to recruitment, screening, verification, and supplying personnel to work under the client.
Recruitment service generally means just providing recruitment (searching, screening, and referring candidates), not actual supply or deployment of manpower.
Reverse Charge Applicability
Reverse charge (joint charge) is applicable only on supply of manpower service where the client (service recipient) is liable to pay 75% of service tax and the service provider 25%.
Pure recruitment services are not covered under reverse charge; here, the recruitment consultant/service provider charges full service tax and the recipient does not pay under reverse charge.
Reference
As per Section 65 of Finance Act, 1994 and TRU (Tax Research Unit) letter no. B1/6/2005 dated 25/07/2005, recruitment services are clubbed with manpower supply service for service tax purposes.
However, reverse charge is notified only on supply of manpower service, not on pure recruitment.
Summary:
Service Type Reverse Charge Applicable? Service Tax Liability
Manpower supply (deployment of manpower) Yes (joint charge - 75% on recipient) Recipient pays 75%, supplier pays 25% under joint charge
Pure Recruitment Service No Supplier pays full service tax
What to do?
If the vendor is only providing recruitment services (candidate search, screening, no deployment), then you do not pay tax under reverse charge; vendor charges full service tax.
If vendor is supplying manpower (providing personnel to work under you), then reverse charge applies.
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