Whether service tax payable or not?????
This query is : Resolved
01 January 2013
If the Employer deducts TDS on Labour charges under section 194C and issues a TDS Certificate for the same to the employer, then is the Employer liable to pay Service Tax on the same??.If Yes then on What Amt???If No then who is ultimately liable to pay service Tax??
01 January 2013
Is there any employer employee relationship between service provider and receiver??
02 January 2013
yes....that is why the TDS is being deducted.
Instead of Salary, Labour Charges are being paid.thats it..
Instead of Salary, Labour Charges are being paid.thats it..
02 January 2013
Service tax is payable by employee if the value of servies exceeds Rs. 10 lakhs.
Employer is liable under reverse charge if it is works contract even if the value does nt exceed Rs. 10 lakhs in the year.
Further, it is not covered under negative list since service is not provided in course of employment.
Employer is liable under reverse charge if it is works contract even if the value does nt exceed Rs. 10 lakhs in the year.
Further, it is not covered under negative list since service is not provided in course of employment.
02 January 2013
k it means the direct answer to my first question is yes..even though the TDS is deducted,then also the employer has to pay service tax.Right???
03 August 2025
Yes, you got it right.
Here’s a clear summary:
Scenario Recap:
Employer pays labour charges (not salary) to a service provider.
Employer deducts TDS under Section 194C and issues TDS certificate.
Question: Is service tax payable by employer on these labour charges?
Key Points:
Employer-Employee Relationship?
No. This is a contract for services, not salary. So, it’s a service, not employment.
Service Tax Liability:
Since this is a works contract/labour service, service tax is payable.
The liability depends on the value of services and type of service.
Reverse Charge Mechanism (RCM):
If the employer is the recipient of works contract services, then the employer is liable to pay service tax under reverse charge, even if the service provider deducts TDS.
The threshold limit of Rs. 10 lakhs does not apply for works contract services under reverse charge; service tax is payable irrespective of value.
Amount on which service tax is payable:
On the labour charges paid or payable (i.e., the value of the service portion of the contract).
🔹 Answer to your question:
Yes, even if TDS is deducted, the employer has to pay service tax under reverse charge on labour charges.
The deduction of TDS does not affect the liability to pay service tax.
The employer (service recipient) is ultimately liable to discharge service tax under reverse charge on the labour service value.
Here’s a clear summary:
Scenario Recap:
Employer pays labour charges (not salary) to a service provider.
Employer deducts TDS under Section 194C and issues TDS certificate.
Question: Is service tax payable by employer on these labour charges?
Key Points:
Employer-Employee Relationship?
No. This is a contract for services, not salary. So, it’s a service, not employment.
Service Tax Liability:
Since this is a works contract/labour service, service tax is payable.
The liability depends on the value of services and type of service.
Reverse Charge Mechanism (RCM):
If the employer is the recipient of works contract services, then the employer is liable to pay service tax under reverse charge, even if the service provider deducts TDS.
The threshold limit of Rs. 10 lakhs does not apply for works contract services under reverse charge; service tax is payable irrespective of value.
Amount on which service tax is payable:
On the labour charges paid or payable (i.e., the value of the service portion of the contract).
🔹 Answer to your question:
Yes, even if TDS is deducted, the employer has to pay service tax under reverse charge on labour charges.
The deduction of TDS does not affect the liability to pay service tax.
The employer (service recipient) is ultimately liable to discharge service tax under reverse charge on the labour service value.
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