Service Tax on Labour Charges

We are a manufacturing company and off loading some of the jobs like gear cutting , turning, grinding etc. 

Is Service tax payable on Job works/ Labour charges.

Please reply.

 

Thanks.

Replies (6)

Your product attract Excise therefore no service tax on jobwork

 

Originally posted by :N V SIMHA
"

We are a manufacturing company and off loading some of the jobs like gear cutting , turning, grinding etc. 
Is Service tax payable on Job works/ Labour charges.
Please reply.
 
Thanks.

If you are manufacturing excisable goods and paying the excise duty then all processes done by the job worker are exempt under Not 8/2005. In these cases it maybe preferable that you issue invoice under Rule 4 (5) (a)

If you are not excisable then the processes which amount to manufacture at the job workers end wouldbe excluded from the coverage under BAS clause - production or processing of goods for or on behfl of another.

"


 

Sorry it is not invoice but delivery challans.

"If you are manufacturing excisable goods and paying the excise duty then all processes done by the job worker are exempt under Not 8/2005. In these cases it maybe preferable that you issue invoice under Rule 4 (5) (a)

If you are not excisable then the processes which amount to manufacture at the job workers end wouldbe excluded from the coverage under BAS clause - production or processing of goods for or on behfl of another."

I agree with Mr Madhukar and want to add that even if your Product is excisable goods and you are paying Excise Duty on the same, however the place where Job Work is done is important . If Job work is done within your Excise Registered Premises using your Machinery & infrastructure, the said activity will be treated under Manpower Supply which will attreact Service Tax . The said Service Tax paid to contractor can be taken back as Cenvat Credit.

The  Job Work Charges paid for the  Material sent out of the factory under Challan 4 (5) (a) will not attreact Service Tax as explained above.

I Want to Know what will be tax implication on that labour,that is whether he/she has to pay service tax or excise duty Eg: Principal is providing raw material to job worker,and after the process done by that job worker whice amounts to manufactuer.

after the such process job worker returns that finished goods to principal and recive payament as labour charges.

my question is what will be tax implication on that job worker.

We are excisable manufacturing unit, we outsource some of our work on labour to a company that does labour job for only our company. if the labour job company further gives our job for further processing like powdercoating / plating on labour to some other company, what willbe the tax implication for the labour job company & how they should send the material (on which challan) / will service tax be applicable. pl clarify..

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