Goods and Services Tax

APPLICABILITY OF GST ON PAYMENT OF ACTUAL WAGES THROUGH LABOUR CONTRACTOR

Goods and Services Tax – Started By: – GEE LIMITED – Dated:- 12-4-2018 Last Replied Date:- 27-9-2018 – QUERY REGARDING GST APPLICABILITY ON PAYMENT OF WAGES TO INDIVIDUAL LABOURERS LABOUR CONTRACTOR PROVIDES WORKERS TO A FACTORY FOR MANUFACTURING OF GOODS. HE IS ISSUING THE FOLLOWING MONTHLY BILLS TO THE FACTORY BILL NO.1 (APRIL 2018) Total Mandays Amount REIMBURSEMENT OF WAGES (ACTUALS WITH EMPLOYEE WISE DETAILS) 1664 670844 EPF – EMPLOYER CONTRIBUTION (ACTUALS) 39969 ESI – EMPLOYER CONTRIBUTION (ACTUALS) 31866 TOTAL 742679 BILL NO.2 (APRIL 2018) Total Working Days Rate Amount CHARGES FOR PROVIDING LABOUR 1636 20 32720 (Total Mandays – Paid Holidays = Total Working Days) WHETHER THE CONTRACTOR IS LIABLE TO CHARGE GST ON BOTH THE BILLS OR WHETHER BILL NO.1 FOR REIMBURSEMENT OF ACTUAL WAGES, EPF AND ESI PAYMENTS WILL BE EXEMPTED FROM THE APPLICABILITY OF GST IN THE LIGHT OF SCHEDULE III (Section-7) – ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A S

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Chapter, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely,- (i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorisation by such recipient; (ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and (iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account. Explanation.- For the purposes of this rule, the expression pure agent means a person who- (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hol

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ent' of you as per the definition given in the rule. Therefore the contractor is correct in charging gst on the entire amount charged by him towards supply of manpower. – Reply By Susheel Gupta – The Reply = Employer of the contractual labour shall be the contractor not company. Moreover,as per ESI and PF records the employer shall be contractor. Therefor the transaction cannot be covered under Schedule III. Labour contractor cannot be treated as pure agent since as per rule 33(iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account . In your case the contractor is not taking any additional services from the labour instead this is the primary services which the contractor is providing and charging for this. GST applicable on entire amount. – Reply By KASTURI SETHI – The Reply = Beautifully explained by all experts. Appreciable for the quality. hard labour, precious ti

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Leave a Reply