The Hindu Business Line : Manpower supply

If a consultant provides services of diligence on prospective employees and verification of details thereof where no actual recruitment or supply takes place, what will be the taxability of such services?

Dinesh R.

Though the definition of taxable services in Section 65(105)(k) states `in relation to', it implies actual recruitment or supply as well as incidental services in relation thereto.

However, in order to clarify, Finance Bill, 2007 inserts an explanation to the definition which implies that taxable services in relation to recruitment or supply of manpower shall also include pre-recruitment screening; verification of credentials and antecedents of the candidates; and authenticity of documents submitted by candidates.

Thus, the aforesaid three related services shall also be taxable. However, such explanation is only clarificatory in nature and the Department may ask for service tax on such services rendered in the past also.

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