service tax on labour contract

We are engaged with manufacturing co. & fabrication. We are charging service tax on labour charges to our customer & one of our customer is told us don't charge service tax to us. Is it possible that we can't charge him a service tax?

What is the service tax rule about labour charges of fabrication work? Can we charge him service tax or not?

Why not we can charge him service tax?

Dear sir,

we are in business of providing labour, now here i earn as labour commission per day per labour on daily wages and also giving the salary to labour and also making the payment of provident fund under my firm's name only.

pls suggest whether total payment (i.e. salary+pf+commission) is the total turnover or only commission is turnover.

thanking you,

Hitesh

+9879798381

Whether salary and PF is received from your customers as reimbursable expenditure?

We are manfuacturer of Pipe Fittings, We are giving labour contract to various labour contractor on piece basis and daily basis. We are also paying duty on our final product.

Labour contractor doing labour jobwork in our factory.

Can Labour Contractor can charge Service tax on labour cost?

WRT - Rupesh Query

In this case since youhave mentioned piece rate it is assumed that the contractor will notbe paid unless he produces the pipe fittings and that he works on principal to princiapl basis with responsibility on  him.

If so, the ST is liable if the activity of the contractor does not amount to manufacture as set out in Section 2 (f) of CEAct.

In this regard if there is a distinct and different item coming into existence then ti si considered as manufacture.

We are doing cleaning service contract work out off total contract amt. 20% is for cleaning materials and consumables. Cleaning materials and consumables purchased  with vat in this connection shall be claimed exception of service tax  of cost of cleaning materials.

with regards

Dear sir,

we are getting labour( Causal) for housekeeping, helper and any other work form labour contrator.

please lwt us know under which notifiaction it is cover and what is the % of ST to be charged by the alobur contractor

regards

Hemant  

Section 2A of Service Tax (Determination of Value) Rules, 2006: Determination of value of services involved in the execution of a works contract:

(1)       Subject to the provisions of section 67, the value of taxable service in relation to services involved in the execution of a works contract (hereinafter referred to as works contract service), referred to in sub-clause (zzzza) of clause (105) of section 65 of the Act, shall be determined by the service provider in the following manner:-  

(i)        Value of works contract service determined shall be equivalent to the gross amount charged for the works contract less the value of transfer of property in goods involved in the execution of the said works contract.

             Explanation.- For the purposes of this rule,-  

(a)       gross amount charged for the works contract shall not include Value Added Tax (VAT) or sales tax, as the case may be, paid, if any, on transfer of property in goods involved in the execution of the said works contract;

 

(b)       value of works contract service shall include,-

(i) labour charges for execution of the works;

(ii) amount paid to a sub-contractor for labour and services;

(iii) charges for planning, designing and architect’s fees;

(iv) charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract;

(v) cost of consumables such as water, electricity, fuel, used in the execution of the works contract;

(vi) cost of establishment of the contractor relatable to supply of labour and services;

(vii) other similar expenses relatable to supply of labour and services; and

(viii) profit earned by the service provider relatable to supply of labour and services;

(ii)      Where Value Added Tax or sales tax, as the case may be, has been paid on the actual value of transfer of property in goods involved in the execution of the works contract, then such value adopted for the purposes of payment of Value Added Tax or sales tax, as the case may be, shall be taken as the value of transfer of property in goods involved in the execution of the said works contract for determining the value of works contract service under clause (i).

 

I think everything is clear now.