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Reverse charge on cleaning services

s jain (student) (67 Points)

12 December 2013

URGENT!!!!!!!!!

Reverse charge on cleaning & house keeping contract

Case: M/s ABC Ltd. has employed house-keeping agency M/s TIP-TOP (Proprietor) for cleaning office premise. As per the terms of contract, M/s TIP-TOP is required to clean all furniture and office premises daily. During discussion between M/s ABC Ltd. and M/s TIP-TOP it was agreed that 7 persons will be deployed for carrying out the above job. Each of the person would be paid Rs.10,000/- per month. Thus the total consideration for carrying out the above work is Rs.70,000/- per month. Further it is also decided that, Mr Y will supervise the work of M/S TIP-TOP. M/s ABC Ltd has approached you for advise whether service tax is payable under reverse charge by them and if yes under which category?

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3 Replies

Neljo Davis ACA (Consultant) (630 Points)
Replied 12 December 2013

If the agreement provides for supply of labour by M/s.TIP TOP to M/s ABC Ltd, the contract will come under “Supply of manpower” (Supply of manpower, temporarily or otherwise, to another person to work under his superintendence or control.) 75% of service tax liability is for service receiver. (Role of Mr.Y is not clear; Is Mr.Y is employee of Ms.TIP TOP or Ms.ABC Ltd, or Independent supervisor?)