Service Tax Levied On Outsourcing Manpower

My vendor (Outsourcing agency) is charging us service tax on complete value of outsource bill. Where as the agreed component which is a salary + statutory is coming to Rs.8000/-. Over and above there is 10% service charges are paid to my vendor, which is coming to total of Rs.8800/- paid to him on monthly basis.

My question is the service tax to be levied on Rs.800/- which is service charge or total Rs.8800/- ?

We are not able to get any clarification on the same, can you please help us.

Sekhar

Service tax would be on entire amount i.e. 8800, not only at 800 as we are also using an outsourcing agency & paying the service tax on entire amount.
We checked woth our legal person also.

It will be taxable on the gross value i.e. Rs.8800/- in your case. This is w.e.f. 16-06-2005.

please post the relevant notification number for total outsourcing of services. For toatal outsourcing i hope the reverse tax mechanism does not apply. please do help me with the relevant notifications..

Service Tax is chargeable on gross bill. From June 15 Principal Employer will have to deposit the full Service Tax not the vendor

please do post the relevant notification number and the details. As of now outsourcing agency charges the end user full service tax and remits 100% to govt. Rev tax waa not applicable. Pls post the changed scenario if any