As per the Service Tax Notification No. 30/2012 dated 20th June
2012, reverse charge mechanism of service tax has become applicable on a few
services w.e.f. 1st July 2012, including manpower supply services. Under
this scheme, service tax is payable to some extent by the service
recipient instead of the whole amount being paid by the service provider. The
service receiver has to register himself under service tax. Further, the
service receiver cannot claim general exemption limit of Rs.
10,00,000, therefore he has to pay service tax even on a few rupees worth of
service received.
Services provided
or agreed to be provided by way of supply of manpower for any purpose are taxable under the
service tax law, wherein 25% of the service tax payable will have to be
deposited by the person providing service and 75% of the service tax payable
will have to be deposited by the service receiver.
However, it is to be noted that the reverse charge is applicable only
if the service receiver and the service provider satisfy a few conditions,
which are as follows:
·
The service provider is an Individual
(proprietor), or partnership firm (registered or unregistered) or an HUF.
·
The service receiver is any
company formed or registered under the Companies Act, 1956 or a business entity
registered as body corporate located in the taxable territory.
In case the abovementioned conditions are not satisfied, the
service provider has to pay tax on the full amount of service.
Therefore, if a person (body corporate/company) is receiving
services of manpower supply, then it must register itself for service tax.
And, if it has already registered itself under the
service tax act and is receiving these services, then it has to add this specific
service in its service tax registration certificate.
