Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 13-11-2017 – Under GST regime, there have been a lot of issues regarding taxability of transactions between employer and employee and applicability of reverse charge mechanism on such transactions. Now, according to clause 1 of Schedule III of the CGST Act, 2017, any services provided by employee to employer in course or in relation of employment shall not be considered as supply. This means that consideration paid for such services shall not be taxable under GST regime. Further, it has been provided under section 15 of the CGST Act, 2017 that employer and employee are related persons. EMPLOYEE REIMBURSEMENTS: Employees are being paid back for the business expenses incurred by them on behalf of the employer in furtherance of business. However, reimbursements shall not be liable to GST if services are provided in course of employment. It can be considered that employee here takes the role of agent who does spending on behalf o
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
son. Also there would be cases where company would be ineligible to claim input tax credit even if employee incurs expenses from registered parties like food and beverages services i.e. restaurant service, health services, etc as mentioned in section 17(5). 2. Reimbursements to employees for expenses incurred from unregistered dealer If expenses incurred by employee are from unregistered persons then also it will be deemed that the employer has received the said supply and the employee has merely acted as an agent. Also, the ITC paid tax on such supply under reverse charge mechanism shall be admissible just like it is admissible in case of supply from registered dealer. For example, if employee has paid for food and beverages on behalf of employer to unregistered person; then such employer shall pay GST under reverse charge but the credit shall not be allowed as it is blocked credit under section 17(5) of CGST Act, 2017. It is worthwhile to mention here that a company is availing the I
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ces or receipts are required to be produced by the employee for the spending to employer. The employee at his / her discretion use the money with any vendor of his / her choice. The control on such spending shall not be with the employer. For example, each employee has been provided with travel allowance of ₹ 4000 per month wherein employee at his discretion uses mode of travel whether self or rented and is also not required to produce any invoices or receipts in that respect. Thus, in case of allowances provided to employee by employer no GST shall be applicable as it is maybe an organizational obligation of employer and would be services in course of employment. It is worthwhile to mention here that in such case, this amount should form part of the salary and only salary should be debited in the books of company. No other expense pertaining to this amount of allowance should be debited in the books of company. Therefore, the company will not be liable to pay tax under reverse c
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =