Service tax on works contract under reverse charge mechanism

Assuming that you are providing your services in respect of original work,you are entitled for abatement and taxable value will be 40% of the total amount.Your liability will be 50% of the taxable amount.

If Mr X has only supplied labour, then he has provided services of MANPOWER SUPPLY , not of works contract.

If services of Manpower Supply are provided by an individual to a business entity registered as body corporate, then partial reverse charge is applicable. In this case service provider is required to pay 25% service tax and service receiver is required to pay 75% of the service tax.

However, one can restrict his liability to pay service tax is subject to the provision relating to N/N 33/2012, if he opts for it.