Hello,
Please go through the problem below:
Company "A" has a contract with Company "B" about providing man power to Co. "B". Company "A" has hired qualified executive on their (Co.A's) payroll and provided services to B. However B is agreed to pay employee cost and 20% extra charge on employees cost to A.
Now, will A load the service tax on 20% charge or on total bill including employees cost????
Limit is 10L that I know.
Please advice.
Dear Rajkumar,
In ur case Service tax will be charged on total amount (i:e salary + 20%)..
Reasons:-
1) Co. A will be billing Co B FOR THE ENTIRE AMOUNT & NOT JUST FOR 20%..
2) UR CASE DOESNOT FALLS UNDER THE PROVISIONS OF PURE AGENT - Since in this case Co B is not liable to make the payment to the empoyees of Co. A (which is one of the condition of Pure Agent)
Refer RULE 5 of Service Tax (Determination of Value) Rules 2006
Thank You Mr. Amir.
CAclubindia
