The manpower recruitment or supply agency service is defined under section 65(68) of the Finance Act, 1994. The definition as given in the provision is represented below for reference –

Manpower recruitment or supply agency’ means any person engaged in providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to any other person’.

The above mentioned service is enumerated in the reverse charge notification no. 30/2012 under serial no. 8 as ‘any service provided or agreed to be provided by way of supply of manpower for any purpose or security service. In fact, the ‘security service’ was brought under reverse charge later by adding to the serial no.8 vide notification 45/2012 dated 7th August, 2012.

As per the provision in the notification the service tax under reverse charge on supply of manpower for any purpose or security service was paid partially by the service provider and service receiver in the ratio of 25:75 respectively up to 31st March, 2015. The proportion of service tax liability paid in the ratio of 25% and 75% has been amended to substitute to NIL and 100% with effect from 01.04.2015 vide notification no. 7/2015 dated 1st March, 2015.

With the above amendment in reverse charge notification, the service provider is made free from the liability of paying service tax under reverse charge mechanism, provided the conditions as laid down in the  notification no. 30/2012 as amended from time to time is satisfied.

As the service receiver is now become liable to pay full service tax, the revenue from service tax to the ex-chequer may increase. The logical reason inferred here is that the portion of service tax which was not realizable earlier from the service provider whose turnover were below the threshold exemption limit is now become liable to be paid by the recipient of the service under revere charge mechanism. The provision of threshold exemption of Rs.10lacs is not applicable to the service provider paying service tax under reverse charge mechanism.

Further, the service tax under reverse charge shall be paid by cash and no CENVAT credit facility is available to meet out this liability.

(The above article is authored by Ganeshan Kalyani and he can be reached via email on

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Tags : CBEC (401) Reverse Charge Mechanism (123)

0 responses to “Service tax under reverse charge on supply of manpower for any purpose or security service”

  1. Ganeshan says:

    Further to my reply i would like to add that registration should be done under correct accounting code. If done mistakenly then it should be correct. Mere registered under wrong code will be not cease the responsbility of paying service tax.

  2. Ganeshan says:

    If manpower supply service received by a company and provider is other than company then reverse charge is applicable and service receiver has to pay service tax.

  3. Rampratap Yadav says:

    If service provider is providing the painting service and he is charging the service tax at the rate of 14% but showing the manpower recruitment or supply agency and accounting code 440060 as service tax category and code. And he properties then in said case rcm will applicable.

    • Ganeshan says:

      Painting is a kind of works contract service where both material and labor portion is involved. Hence it falls under reverse charged.

  4. Atul Kumar Jain says:

    Please confirm following:-

    -receiver’s liability in case of service provider is other than company.

    -is it cover in case of Job work bill/ repairing work of machine/building

    Atul Jain

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