No GST on canteen expenses recovered from staff, says AAR

GST won’t be levied on the quantity paid by staff for availing canteen services supplied by their employers, the AAR has dominated.

Tata Motors had approached the Gujarat bench of Authority for Advance Ruling (AAR) searching for a ruling on whether or not Items and Providers Tax (GST) is relevant on the nominal quantity recovered by it from staff for the utilization of canteen facility.

The corporate additionally sought a ruling on whether or not enter tax credit score (ITC) is on the market on GST charged by the service supplier on the canteen facility supplied to staff working within the manufacturing unit.

In its ruling, the AAR noticed that Tata Motors has organized a canteen for its staff, which is run by a 3rd celebration canteen service supplier. As per their association, a part of the canteen expenses is borne by Tata Motors whereas the remaining half is borne by its staff.

The mentioned staff’ portion of canteen expenses are collected by the corporate and paid to the canteen service supplier.

Additionally, Tata Motors submitted that it doesn’t retain with itself any revenue margin on this exercise of accumulating staff’ portion of canteen expenses.

In its ruling the AAR mentioned that the ITC on GST paid on canteen facility is blocked credit score underneath the GST Act and inadmissible to applicant.

“GST, by the hands of the applicant, is just not leviable on the quantity representing the workers portion of canteen expenses, which is collected by the applicant and paid to the canteen service supplier,” the AAR mentioned.

AMRG & Associates Senior Associate Rajat Mohan mentioned at the moment corporates offering subsidised meals services are charging 5 per cent tax on meals recoveries constituted of staff.

“Authority has dominated that the place canteen expenses are borne by the employer and solely a nominal half is charged from staff, no GST could be payable on such recoveries. This ruling has sufficient persuasive worth for all the company taxpayers to take a tax-efficient tax place,” Mohan added.

(Solely the headline and movie of this report could have been reworked by the Enterprise Customary workers; the remainder of the content material is auto-generated from a syndicated feed.)

Expensive Reader,

Enterprise Customary has all the time strived arduous to supply up-to-date data and commentary on developments which are of curiosity to you and have wider political and financial implications for the nation and the world. Your encouragement and fixed suggestions on tips on how to enhance our providing have solely made our resolve and dedication to those beliefs stronger. Even throughout these tough instances arising out of Covid-19, we proceed to stay dedicated to retaining you knowledgeable and up to date with credible information, authoritative views and incisive commentary on topical problems with relevance.

We, nevertheless, have a request.

As we battle the financial influence of the pandemic, we’d like your help much more, in order that we will proceed to give you extra high quality content material. Our subscription mannequin has seen an encouraging response from a lot of you, who’ve subscribed to our on-line content material. Extra subscription to our on-line content material can solely assist us obtain the targets of providing you even higher and extra related content material. We imagine in free, honest and credible journalism. Your help by means of extra subscriptions can assist us practise the journalism to which we’re dedicated.

Help high quality journalism and subscribe to Enterprise Customary.

Digital Editor