service tax for man power supply

MAN POWER RECRUITMENT AGENCY

Date of Introduction: 07.07.1997 vide Notification No.23./97-ST dt.02.07.1997

Definition:

“Manpower recruitment agency " means any commercial concern engaged in providing any service, directly or indirectly, in any manner for recruitment of manpower, to a client.

(Section 65(40) of Finance Act, 1994 as amended)

Taxable event and Scope of service:

Taxable service means any service provided to a client, by a manpower recruitment agency in relation to the recruitment of manpower in any manner.

(Section 65(72) (k) of Finance Act, 1994 as amended) The coverage of the term “manpower recruitment agency” is wide and includes within its ambit, the services provided by an agency from the primary stage of building a database of manpower for different categories of personnel employment, whether white collar or blue collar, whether for employment in India or overseas, determining manpower requirement for the client, preliminary identification, short-listing and screening of prospective candidates, providing specialists for interviewing prospective candidates, arranging for their interviews at each stage; placing advertisements for recruitment of manpower in the print or electronic media, etc. Service Tax on manpower recruitment agency shall cover services provided by a man-power recruitment agency to a client from the initial stage of selecting / identifying man-power required for any prospective employment, till the stage of actual selection for the same. In cases, where a person approaches a manpower recruitment agency for being employed in a suitable position abroad, the prospective candidate for employment becomes the client for purposes of Service Tax. (Ministry’s F.No.B43/5/97-TRU dt.02.07.2001.)

The academic institutions, recruiting their students for industrial establishment on receipt of payment fall within the scope of definition of term “Manpower recruitment agency” and become liable to pay service tax. Similarly the trusts providing the services of manpower recruitment agency are also liable to pay service tax under the category of “manpower recruitment agency”.

Value of Taxable Service:

Value of taxable service shall be the gross amount charged by the service provider for such service rendered by him. (Section 67 of Finance Act, 1994 as amended)

The manpower recruitment agency receives remuneration from the client for the services rendered by him as per the stipulations in the contract/agreement between them. The payment from the client is received at different stages, based on the completion of work/service at each stage. The manpower recruitment agency shall be required to pay Service Tax on the payments received at each stage from the client by the 25^th of the succeeding month / 25^th of the month immediately following the quarter, as the case may be. Subsequent modifications, if any, in the bills raised to the client at the time of final payment may be allowed after verification.

(Ministry’s F.No.B43/5/97-TRU dt. 02.07.1997)

Explanation & Exclusion:

1. Service Tax on manpower recruitment agencies shall be the gross amount charged to the client for services rendered in relation to the recruitment of manpower excluding the amount incurred by the manpower recruitment agency on behalf of the client towards expenses, which are reimbursed on actual basis. The Commissioners may selectively, in doubtful cases require the manpower recruitment agency to substantiate such actual expenses on the basis of documentary evidence. In case the manpower recruitment agency is billing the client on the basis of a lumpsum, any deductions from the same on account of reimbursable expenses, for the purposes of determining the value of taxable service may be permitted on the basis of documentary evidence adduced by the agency. (Ministry’s F.No.B43/5/97-TRU dt.02.07.1997)

2. The labour contractors, who supplied their own labour on contract could not be covered under the definition of “manpower recruitment agency”.

No, You have to charge Service tax on gross amount.

Originally posted by : U S Sharma
	MAN POWER RECRUITMENT AGENCY   Date of Introduction: 07.07.1997 vide Notification No.23./97-ST dt.02.07.1997   Definition: “Manpower recruitment agency " means any commercial concern engaged in providing any service, directly or indirectly, in any manner for recruitment of manpower, to a client. (Section 65(40) of Finance Act, 1994 as amended)   Taxable event and Scope of service: Taxable service means any service provided to a client, by a manpower recruitment agency in relation to the recruitment of manpower in any manner. (Section 65(72) (k) of Finance Act, 1994 as amended) The coverage of the term “manpower recruitment agency” is wide and includes within its ambit, the services provided by an agency from the primary stage of building a database of manpower for different categories of personnel employment, whether white collar or blue collar, whether for employment in India or overseas, determining manpower requirement for the client, preliminary identification, short-listing and screening of prospective candidates, providing specialists for interviewing prospective candidates, arranging for their interviews at each stage; placing advertisements for recruitment of manpower in the print or electronic media, etc. Service Tax on manpower recruitment agency shall cover services provided by a man-power recruitment agency to a client from the initial stage of selecting / identifying man-power required for any prospective employment, till the stage of actual selection for the same. In cases, where a person approaches a manpower recruitment agency for being employed in a suitable position abroad, the prospective candidate for employment becomes the client for purposes of Service Tax. (Ministry’s F.No.B43/5/97-TRU dt.02.07.2001.)   The academic institutions, recruiting their students for industrial establishment on receipt of payment fall within the scope of definition of term “Manpower recruitment agency” and become liable to pay service tax. Similarly the trusts providing the services of manpower recruitment agency are also liable to pay service tax under the category of “manpower recruitment agency”.   Value of Taxable Service: Value of taxable service shall be the gross amount charged by the service provider for such service rendered by him. (Section 67 of Finance Act, 1994 as amended)   The manpower recruitment agency receives remuneration from the client for the services rendered by him as per the stipulations in the contract/agreement between them. The payment from the client is received at different stages, based on the completion of work/service at each stage. The manpower recruitment agency shall be required to pay Service Tax on the payments received at each stage from the client by the 25th of the succeeding month / 25th of the month immediately following the quarter, as the case may be. Subsequent modifications, if any, in the bills raised to the client at the time of final payment may be allowed after verification. (Ministry’s F.No.B43/5/97-TRU dt. 02.07.1997)   Explanation & Exclusion: 1. Service Tax on manpower recruitment agencies shall be the gross amount charged to the client for services rendered in relation to the recruitment of manpower excluding the amount incurred by the manpower recruitment agency on behalf of the client towards expenses, which are reimbursed on actual basis. The Commissioners may selectively, in doubtful cases require the manpower recruitment agency to substantiate such actual expenses on the basis of documentary evidence. In case the manpower recruitment agency is billing the client on the basis of a lumpsum, any deductions from the same on account of reimbursable expenses, for the purposes of determining the value of taxable service may be permitted on the basis of documentary evidence adduced by the agency. (Ministry’s F.No.B43/5/97-TRU dt.02.07.1997)   2. The labour contractors, who supplied their own labour on contract could not be covered under the definition of “manpower recruitment agency”.

Dear Sir,

We worked for a company, where we supplied manpower to the client for an assigned work, where the employees were on our payroll. we were committed for a commission for the assigned work. 

Do we need to pay the service tax for the received amount, which was the reimbursement of the salary of the employees.

Secondly is it our obligation to pay the service tax, irrespective of the amount received by the client or not. This case is for the year 2009 -10.

waiting for your reply ASAP.

with regards