Service tax on lease of machinery with man power.
This query is : Resolved
28 May 2014
We are SSI manufacturers of packing machine. we have given packing machine on lease basis along with our manpower to a ap state govt organisation. for ex: One month lease amount along with man power is Rs. 1,00,000/- how service tax is caluclated. strait away 12.36% on 1,00,000/- ? and also please guide us the service tax head on which the payment has to be made.
We are SSI manufacturers of packing machine. we have given packing machine on lease basis along with our manpower to a ap state govt organisation. for ex: One month lease amount along with man power is Rs. 1,00,000/- how service tax is caluclated. strait away 12.36% on 1,00,000/- ? and also please guide us the service tax head on which the payment has to be made.
28 May 2014
firstly you bifurcate the amount of lease in two parts:
(i) Lease rent for machine
(ii) Charges for Supply of labour
if we consider the Machine is on financial lease then you have to pay service tax on 10% of lease rent. (Abatement under notification 13/2012 dated 17 March, 2013)
Suppose Lease rent is Rs. 10,000 then Service tax will be (10,000 X 10% X 12.36%)Rs.123.60.
Supply of Manpower is covered under reverse charge Mechanism you need to pay service tax on 25% amount of charges.
suppose amount charges is Rs. 10,000 then service tax on supply of man power will be (10,000 x 25% x 12.36%)Rs.309.00.
(i) Lease rent for machine
(ii) Charges for Supply of labour
if we consider the Machine is on financial lease then you have to pay service tax on 10% of lease rent. (Abatement under notification 13/2012 dated 17 March, 2013)
Suppose Lease rent is Rs. 10,000 then Service tax will be (10,000 X 10% X 12.36%)Rs.123.60.
Supply of Manpower is covered under reverse charge Mechanism you need to pay service tax on 25% amount of charges.
suppose amount charges is Rs. 10,000 then service tax on supply of man power will be (10,000 x 25% x 12.36%)Rs.309.00.
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