Service tax on placement agencies

you can avail exemption of Rs.10  lakhs in a financial year, irrespective of proprietor or a company. After Rs. 10 lakhs, you have to pay service tax at full rate @ 12.36% on the 25% of the value of the service, and on the remaining value of 75%service , receiver will pay. These changes are effective fron 01.7.2012

Raksh*t 9810525780

You please continue billing as earlier.  you will not come under reverse charge mechanism (RCM).  RCM is applicable only for supply of man power.  You are not supplier of man power.  You are just referring candidates to different companies.  Moreover the candidates you are referring are not under supervision or control.  Hence you can continue billing as earlier.  Entire service tax is to be paid by you only.

You need to discuss those clients who are asking to deduct 75% of ST that you are not a manpower supplier and  you are merely facilitating in recruitment process by filtering the candidates. Notification 30/2012 is applicable to Manpower supplier only. Moreover you take care that the descripttion of your invoice must be showing as "Recruitment Consultancy Services" and not manpower services..

Dear Mr. Shriwas,

Service provider's turnover is less than Rs. 10 lakhs no need to pay service tax on 25% of the total value only recipient will pay the service tax. Recipient of service turnover is less than Rs. 10 lakhs no need to pay service tax on 75% of the total value. 

Section[65. Definitions]

(68) "manpower recruitment or supply agency” means any person engaged in providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to any other person.

The law hasn't differentiated the word recruitment with supply, so manpower recruitment and manpower supply service should be covered in RCM. Moreover, there is not separate accounting head prescribed for manpower recruitment and manpoer supply services.