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Nimesh (Business Head)     10 June 2009

Service Tax Query

I am a Manpower services provider. Now I have a query regarding the service Tax. I am already registerd in Service tax Dept since 2 yrs and I am collecting ser. tax from my clients and I am filing the return for the same as well.

Now I have started the pay-roll service, where I shall put my employees on deputation to my clients. I shall charge their salary + My service charges + Service Tax  from the clients on monthly basis.

Now the salary of the candidate will be decided by my client , I shall have to charge 10% additional as my services charges + ser. tax

Now my queries is

suppose my client has hired my employee at Rs 5000 per month so my bill would be as under

  5000 (candidate salary)

+500  (My service charge)

Service Tax (@10.30% of what???????? )


now please help me on which amount I should charge the

is it should be chargerd on 500 Rs (Which is my service charge) or is it should be on 5500 (The total bill amount) ???

Few of my colleagues have suggested me that the should be always on total bill amount, now if that is the case then for the client he has to pay around 22% more on the salary paid to the candidate. so it would be expensive from his part, and may not be ready to give the service tax???


Please guide me for the same


 7 Replies

A V Vishal (Advocate)     10 June 2009

Dear Nimesh

The ST has to be collected on 5500, even though the component of service charge is only 500, but none the less the contract is between you and your client, even though the salary is decided by the client. The only way out would be do not show the employee deputed to the client as your employee, rather you receive the service charges only, then your client will have to pay tax on 500 only


 its all about how u raise a bill. Quite agree with Vishalji's advice. 

saifraj (accountant)     12 June 2009

We are manufacturing exicisable goods paying full rate of exise duty. We can avail service tax credit. Please tell me which credit we can avail ?

Out of Telephone bill, Bank charges, Labour charges, carriage bills, consulation fees, repair charges of machinery, manpower supplier or any other

Anurag Mehta (Tax Consultant)     12 June 2009

 Dear Saifraj,

You can avail service tax credit on all the services received by you / on waht ever services service tax is charged. 

1 Like

Anurag Mehta (Tax Consultant)     12 June 2009

 Dear Saifraj,

You can avail credit on all the services received on which service tax is charged.

Adv. Santosh Mahanor (Lawyer)     23 June 2009

I agree with Mr.Mehta but just i would like to add one more thing that when you take the service

tax credit on telephone bill that bill must be in the name of company on which you obtain the service tax registration


It is advisable to have the bills in the name of the Company to avoid future hassles by the Deptt........Otherwise it is not possible everytime to have bills in this way

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