Service tax on labour charges

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 July 2014 if company hire labour from FIRM then reverse charge will apply and part of labour charges ,service tax paid by firm or company.

Labour charges =2,00,000
service tax =24,720
total =2,24,720

service tax paid by company and Firm.

Ganeshbabu K

Ganeshbabu K (Expert)
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16 July 2014 If company is service receiver and firm(Not an LLP) is service provider
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Then Service receiver is liable to discharge 75% of Service tax to dept.
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Hence service receiver have to pay 75% of service tax on 2lakhs
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I.e,=200000*12.36%*75%=(Amount payable )
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Tax should be paid under service tax registration number of service receiver and included in his return as he is liable to pay service tax.

Service tax is payable by service receiver when actual payment is made to service provider and not on receipt of Invoice from service provider. However, if payment is not made to service provider within 6 months(From the latest budget it is 3 months from invoices issued after 01.10.2014), service tax is anyway payable. Interest is also payable.
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Service provider if he is under ambit of service tax will charge only 25% of service tax in his invoice