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Transaction Value in case of Manpower supply service

Bhargav Shiva (Student) (120 Points)

15 August 2018

In the invoive, along with manpower charges, Pf, Esi and service charges are charged by contractor and the GST amount charged is including all the above. My doubt is to whether include pf & esi in the transaction value or not. You may say that, what's the big deal in this, just pay and claim ITC but our outward supply is exempt so we can't avail ITC.
Kindly clarify the same.

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5 Replies

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 15 August 2018

Yes yes gst is applicable in ESI, PF its a part of consideration for supplying man power which also includes PF & ESI. moreover, as per section 15 cgst act, transaction value for the levy of gst is a total consideration including duties and taxes

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Bhargav Shiva (Student) (120 Points)
Replied 15 August 2018

Sir, but how can we consider PF & ESI as duties and taxes???

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 15 August 2018

For contractor its merely expenses.

chandrasekar (Accountant) (12 Points)
Replied 16 July 2020

PF AND ESI and workers payment not the consideration of the contractor, if it is show separately then consideration only the income of the contractor remaining things paid to workers and respective epf and esi account, then why gst applicable for everything, can you explain

CA Pankaj Warke (Fin Man) (268 Points)
Replied 23 August 2020

By your logic, the salaries paid to workers should also not be included as those are paid to workers and not an income of the contractor. But, please refer to the valuation rules under GST. Under GST law taxable value is the transaction value i.e. price actually paid or payable, provided the supplier and the recipient are not related and price is the sole consideration. Any taxes, fees, charges levied under any law other than GST law, expenses incurred by the recipient on behalf of the supplier, incidental expenses like commission & packing incurred by the supplier, interest or late fees or penalty for delayed payment and direct subsidies (except
government subsidies) are also to be added to the price (if not already added) to arrive at the taxable value.