Business Daily from THE HINDU group of publications
Monday, Nov 20, 2006
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Business Daily from THE HINDU group of publications Monday, Nov 20, 2006 ePaper |
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Mentor
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Taxation Columns - At Your Service Manpower recruitment
I provide software technical services to big companies by sending technical people to client companies on sub-contract basis. Till last year, I have not paid any service tax as it was exempted. I don't know whether it is applicable this year or not. If applicable, from when is it? S. Anand Services provided by manpower recruitment agencies were made liable for service tax with effect from July 7, 1997. The scope of these services was enlarged through an amendment, which came into force on June 16, 2005. Before this date, the taxable service in this regard was defined as one provided to a client by a manpower recruitment agency in relation to the recruitment of manpower in any manner. Thus, the scope was limited to the services relating to manpower recruitment. Subsequently, after the enlargement of the scope of the services, the present definition as per Section 65(105)(k) of Finance Act 1994 is: "Taxable service is a service provided or to be provided to a client by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner." Thus, with effect from June 16, 2005, the services relating to supply of manpower have also been included and, further, such recruitment or supply of manpower can be for a temporary period or otherwise. Therefore, if you are sending technical people to your client's premises on contract basis, then the services provided by you will come within the purview of the aforementioned services as supply of manpower services. As a result, you will be liable to pay service tax with effect from June 16, 2005.
Clarity on goods transport
In terms of certain instructions issued on March 30, 2005, the Government of India stipulated that 75 per cent abatement will not be available when the tax is paid by a consignor or a consignee. However, on April 11, 2006, the Government withdrew this circular. Kindly enlighten me about this withdrawal circular/notification dated April 11, 2006. Mahendra Chowdhary With regard to the payment of service tax on goods and transport agency (GTA) services on 25 per cent of the value of the services, the clarification provided by the government was through a letter addressed to the Field Offices by the Director-General of Service Tax on April 11, 2005 (not 2006). This letter is not available to the public. However, in the Regional Advisory Committee Meeting held on March 20, 2006, at Hyderabad under the Chairmanship of the Chief Commissioner of Central Excise, Hyderabad, a reference was made to this internal letter issued by the Director-General of Service Tax, when the members pointed out that such a clarification is not available to the public. The same clarification is contained in the CBEC's instruction letter dated July 27, 2005, which deals with the changes made in terms of Finance Act, 2005.
Send in your queries to MentorAtYourService@gmail.com
S. Murugappan
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