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August 12, 2022

On daily wages, labour charges and contract labour, RCM is not applicable

by CA Shivam Jaiswal in GST, Legal Court Judgement

On daily wages, labour charges and contract labour, RCM is not applicable

Facts and Issues of the case

M/s. Sri Bhavani Developers are into constructions of residential buildings and have opted for new tax scheme. The applicant submitted that, in a particular case they have entered into JDA with one Mr.Sadanda Chary for construction of residential units at Moulali.

The Joint Development agreement between land Owner and Builder was entered and subsequently supplementary development agreement was entered on area sharing basis. They require clarification on whether RCM is applicable to daily wages, Labour Charges and Contract Labour.

Observations by the Court

The law regarding services by an employee to the employer in the course of or in relation to his employment enumerated in CGST Act, 2017 remains unchanged. Therefore tax will not be attracted for labour engaged on daily basis or employees etc., if the service is rendered in the course of such an employment. However manpower supply or labour supply services by manpower supply agency is taxable @18%. This tax has to be paid by the manpower supply agency.

Conclusion

QuestionsRuling
1. Is RCM applicable to daily wages, Labour Charges and Contract Labour?No
In-re-Sri-Bhavani-Developers-GST-AAR-Telangana

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