28 May 2014
We are SSI manufacturers of packing machine. we have given packing machine on lease basis along with our manpower to a ap state govt organisation. for ex: One month lease amount along with man power is Rs. 1,00,000/- how service tax is caluclated. strait away 12.36% on 1,00,000/- ? and also please guide us the service tax head on which the payment has to be made.
28 May 2014
firstly you bifurcate the amount of lease in two parts: (i) Lease rent for machine (ii) Charges for Supply of labour
if we consider the Machine is on financial lease then you have to pay service tax on 10% of lease rent. (Abatement under notification 13/2012 dated 17 March, 2013)
Suppose Lease rent is Rs. 10,000 then Service tax will be (10,000 X 10% X 12.36%)Rs.123.60.
Supply of Manpower is covered under reverse charge Mechanism you need to pay service tax on 25% amount of charges.
suppose amount charges is Rs. 10,000 then service tax on supply of man power will be (10,000 x 25% x 12.36%)Rs.309.00.
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