I am hiring a contractor who will supply labour for my factory. They will not do any construction, but general manual labour in processing raw material to finished product.
The wages to be paid are Rs. 70,000.
The contractor is asking for 10% of wages as his commission, i.e. Rs. 7,000
PF and ESI is also to be paid by the factory owner.
So, in total, roughly Rs. 91,000 is being asked by the contractor since the wages won't be paid directly by the factory owner. The factory owner will give this money to the contractor who will further pay Rs. 70,000 to the labour, keep his commission and deposit the PF and ESI with the Government.
My question is, is the above transaction liable to GST?
If yes, is GST to be paid on Rs. 91,000 which is the total amount paid to the contractor or Rs. 7,000 which is the value of service provided by the contractor?
Warm Regards
Catherine
CAclubindia
