CA Goutam Sharma (Chartered Accountant in Practice) (468 Points)
09 December 2013
VIKASH KUMAR JAIN
(Audit Executive)
(711 Points)
Replied 09 December 2013
satya
(Executive Excise)
(1839 Points)
Replied 09 December 2013
Dear Goutham,
please find below
courtesy:taxindiaonline.com
Reverse charge on manpower supply & security service
JUNE 16, 2013
By Indrajit Chaudhuri
SUPPLY of manpower has been brought into partial reverse charge mechanism vide Notification No.30/2012-ST dated June 20, 2012 and made applicable, inter alia, to services provided or agreed to be provided by any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as a body corporate located in the taxable territory.
Further, security service is also brought under partial reverse charge mechanism vide Notification No.45/2012-ST dt. 7th August, 2012 under the category of supply of manpower or security service. In terms of the definition inserted vide Notification No.46/2012-ST dt. 7th August, 2012 "security services" means services relating to the security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation, detection or verification, of any fact or activity.
In terms of the Notification No.30/2012-ST dated June 20, 2012, 75% of the service tax liability is required to be discharged by the service recipient i.e. Business entity registered as a body corporate for the above services and Balance 25% by the service provider.
It is pertinent to note that many small business entity registered as body corporate takes recourse to avail such supply of manpower service for running their business in a cost effective way. With the imposition of such levy of service tax under partial reverse charge and related compliance is causing inordinate hardship to such small Business entity registered as a body corporates. Likewise, any payments by a business entity registered as a body corporate to every driver and other similar individuals including small time workers could trigger the service tax liability and related compliances under the reverse charge mechanism. Thus, every business entity registered as a body corporate is required to discharge service tax liability for receiving any such insignificant services which is inflicting a huge burden on them and impediment to the growth of their business in such a competitive economic scenario.
In order to lessen the above difficulty, the Government should provide a basic turnover based exemption from levy of service tax under partial reverse charge mechanism for such small business entities registered as a body corporates. In this regard, example of legal service may be drawn, where as part of a relief measure, the Government had provided for an exemption from service tax for those Business Entities whose turnover in the previous financial year is less than Rs.10 lakhs.
Now if we look at the valuation aspect for charging service tax on the above services, we find that in terms of the valuation rules, service tax is leviable on the entire value billed by the service provider i.e. labour charges plus service charges of the service provider. Thus, technically the burden of service tax is getting heightened leading to additional burden on the assessees.
It would be welcome step if the Board can come out with a clarification on this and make valuation for leviability of service tax only on the service charges billed by the service provider, not on the total payment.
satya
(Executive Excise)
(1839 Points)
Replied 09 December 2013
Dear Goutham,
If you wanna more clarity on the above issue, pl follow below link;
CAclubindia
