Service tax for manpower supply

1.You need to obtain registration on crossing the turnover limit of Rs. 9 lacs,however you may volunatarily obtain registration without crossing such limit.However, tax need to be charged only after crossing Rs. 10 limits.

2.As per Reverse chg notification no. 30/2012 , in case the service provider is an individual and service receiver is business entity registered as body corporate then , Service provider has to charge only 25% tax and remaining 75% to be paid to service eceiver.

Here, it is pertinent to note that , the liabiity of service provider to charge 25% arises only when he has crossed his small scale service provider exemp limit of Rs, lacs, but  unlike service provider service receiver is liable to pay tax from Rs. 1  only.

Further, as per the Reverse notification the liability of service provider & service receiver is separate and independent of one another.So,they need to pay 25:75 strictly.

Service Provider is liable to pay service tax. He cannot claim credit on service tax paid on output services provided but it is the service receiver who would claim credit of 25% service tax paid by it to the service provider.

We cannot take input credit which we are liable to pay.

Hence 75% which is paid by receiver cannot be taken for input credit

As per Notification 30/2012-ST, when Manpower Service is provided by any individual, Hindu Undivided Family or partnership firm,AOP(Service Provider-SP) to a business entity registered as body corporate(Service Receiver-SR) , SP & SR will pay S.Tax in ratio of 25:75. If SP not crossed Threshold limit of Rs. 10 lakh, he is not required to pay S.Tax in terms of N/N 6/2005-ST amended by N/N 33/2012-ST. However SR has to pay his share of 75% and may avail Cenvat Credit in both case i.e. (25% paid to SR+75% paid by them) and (0+75%). However SP can not avail cenvat credit of S.Tax(25%) collected from SR.

After crossing 10 lakh, for the service provided to SR other than above SR(Body Corporate Business Entity), SP has to charge and collect full S.Tax and to deposit in Govt.