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TMI BlogDraft Circular on leviability of service tax on staff benefits and employment related transactions- reg .X X X X Extracts X X X X X X X X Extracts X X X X ..... to the employees. These issues have been examined and are proposed to be clarified as follows: A. Scope of manpower supply 2. After the operationlisation of the Negative List, the erstwhile definition of the manpower recruitment or supply agency is no more applicable. Thus, the words manpower supply would have to be given their natural meaning. The manpower supply is understood to mean when one person provides another person with the use of one or more individuals who are contractually employed or otherwise engaged by the first person. The essence of the employment should be that the individuals should be employed by the provider of the service and not by the recipient of the service. 3. There could be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be liable to service tax as it is merely a case of cost reimbursement. C. Directors 7. Services of a director on the board of a company have now become taxable. A director may be appointed either in an individual capacity or to represent an entity (including government) who has either invested in the company or is otherwise authorized to nominate a director. When a director receives payment in his personal capacity, the same is liable to be taxed in the hands of the director. However, where the fee is charged by the entity appointing the director and is paid to such entity, the services shall be deemed to be supplied by such an entity and not by the individual director. Thus in the case of Govt. nominees, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice. The valuation of the service so provided by the employer to the employee shall be determined as per the extant rules in this regard. 10. However, any activity available to all the employees free of charge without any reduction from the emoluments shall not be considered as an activity for consideration and will thus remain outside the purview of the service tax liability (facilities like cr che, gymnasium or a health club which all employees may use without any charge or reduction from the salary will be outside the tax net). However the Cenvat credit for such inputs and input services will be guided by the extant rules. 11. Moreover, it would need to be seen whether the services provided by the employer are otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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