Whether service tax applicable here?

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This query is : Resolved

C.A Alok Mukherjee (Querist)

04 August 2011 Suppose A limited under a contractual agreement with M/S XYZ takes service for supply of man power to A Limited. A limited uses them in various works like factory maintenance, garden maintenance etc. for which A limited pays to M/S XYZ based on their billing. Beside this there are other costs like LTA, medical expenses also which A limited also pays to M/S XYZ for those employees. Whether service tax is applicable on total amount? If these expenses are in the form of reimbursement whether service tax can be waived as if reimbursed to M/s XYZ as pure agent?

rajula gurva reddy

rajula gurva reddy (Expert)

05 August 2011 All expenses such as LTA, Medical Expenses are part of the employee benefits and in certain cases, the salary package includes these benefits. Hence, all the benefits received by the employee are part and parcel of the package of the employee. These amounts are to be reimbursed by the Service receiver on submission of the invoice. Some times, Service Provider also claims the profit/commission on the total package of the employees. In any case, Servie Tax is payable on the gross amount received from the Service Receiver towards supplying manpower.

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