Transportation of Employees
Query (Issue) Started By: – Kusalava InternationalLimited Dated:- 8-5-2018 Last Reply Date:- 22-6-2018 Goods and Services Tax – GST
Got 34 Replies
GST
we are mfg co and provide transportation facility to employee from home to factory and factory to home for that we have purchased bus and given to one person(Unregistered Person) to run bus.For that we are paying every month bill to him.(including Diesel,Driver Salaries and his commission)
\n1.What is the rate of GST to be charged on Bill if he is registered?Please refer SAC Code.
\n2.Can we claim ITC on that bill?
\nReply By Praveen Nair:
\nThe Reply:
\n * SAC – 9964 @18%.
\n * As per section 17(5) of the CGST Act input tax credit shall not be available in respect of motor vehicles and other conveyances except when they are used for making the following taxable supplies;
\n * Further supply of such vehicles or conveyances.
\n * Transportation of passengers.
\n * Imparting training on driving, flying, navi<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n p and dropping the employees from a fixed pick up point to factory and then dropping at the same fixed point. This service cannot be classified in the nature of personal consumption either as the activity is related to business only. Further this transportation service cannot be classified under rent-a-cab service. As such, I feel, GST input tax credit is available in this case. would invite experts counter opinion on this. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n . Moreover, in GST motor vehicles has been mentioned, therefore, it can be said that all motor vehicles as defined under Motor Vehicles Act, 1988, are covered under “Rent-a-cab” service. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n mportant, the meaning given in the Cambridge dictionary is “cab means the separate front part of a large vehicle, such as a truck, bus, or train, in which the driver sits”. Now rent-a-cab means renting of the space which controls the motor vehicle. The bus falls as motor vehicle having capacity of carrying more than 12 passengers and falls with the ambit of “Rent-a-cab” service. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n Reply By Alkesh Jani: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ent's intention is not to allow ITC . It is also the intention of legislature. The definition of cab would not help. In my view , the case is not worth fighting. However, there is a slim chance on the ground of challenging the definition of 'passenger' in this context. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n essee), in most of the cases the amount is very small compared to the annual turnover, and small entrepreneurs cannot afford the litigation and cost for the same. The grounds of notice, orders and appeal and person representing the case is important and than too the decisions may not be expected or favorable. The case law, as on now, have not attained its finality, I may agree with the contention in future. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n TLIMITED: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n n common parlance, gift is made without consideration, is voluntary in nature and is made occasionally. It cannot be demanded as a matter of right by the employee and the employee cannot move a court of law for obtaining a gift. Another issue is the taxation of perquisites. It is pertinent to point out here that the services by an employee to the employer in the course of or in relation to his employment is outside the scope of GST (neither supply of goods or supply of services). It follows therefrom that supply by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST. Further, the input tax credit (ITC) scheme under GST does not allow ITC of membership of a club, health and fitness centre [section 17 (5) (b) (ii)]. It follows, therefore, that if such services are provided free of charge to all the employees by the employer then the same will not be subjected to GST, provided appropriate GST was p<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n general entry. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n that ITC is not admissibie . = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n s except when they are used = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n rd supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" Transportation of Employees Query (Issue) Started By: – Kusalava InternationalLimited Dated:- 8-5-2018 Last Reply Date:- 22-6-2018 Goods and Services Tax – GSTGot 34 RepliesGSTwe are mfg co and provide transportation facility to employee from home to factory and factory to home for that we have purchased bus and given to one person(Unregistered Person) to run … Continue reading “Transportation of Employees”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-11721","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/11721","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11721"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/11721\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11721"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11721"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11721"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
For full text:-Visit the Source <\/a><\/p>\n
\nReply By Alkesh Jani:
\nThe Reply:
\nSir,
\nFor ready reference please allow me to reproduce relevant portion of Section 17(5) of CGST, Act, 2017.
\n“(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:-
\n(a) motor vehicles and other conveyances except when they are used
\n(I)for making the following taxable supplies, namely:-
\n(A) further supply of such vehicles or conveyances ; or
\n(B) transportation of passengers; or…..”
\nFor better<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nBased on above, I am of the view that ITC is not available in the instant case.
\nOur experts may correct me if mistaken.
\nThanks
\nReply By KASTURI SETHI:
\nThe Reply:
\nSh.Alkesh Jani Ji, Top most reply. Crystal clear interpretation.
\nReply By JSW CEMENTLIMITED:
\nThe Reply:
\nSh Alkesh Janiji, appreciate your analysis. But, still I am of the same view that credit of service provided by using the company's bus is available to a manufacturer on the following ground.
\nIn the absence of definition of cab in GST Act, you have to refer the definition given other existing law in force viz; motor vehicle Act only and not repealed law (i.e.section 65(20) of Finance Act which was in in force till 30.06.2012). During Service tax regime, credit on transportation of employees were not available and department has <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nRepeating that an employee cannot be termed as “passenger”. If I accept your contention that bus is not a cab then too it is covered under Section 17(5)(a)(i)(B) of CGST Act, 2017, ITC with regards to motor vehicle except for transportation of passenger, is not available.
\nLet me thank Sh. Kasturiji,Sir for expressing their views.
\nOur experts may correct me if mistaken.
\nThanks
\nReply By JSW CEMENTLIMITED:
\nThe Reply:
\nSir,
\nHere the queriest is not asking for eligibility of ITC on Bus, but his query is with regard to services availed for transportation of employees. ITC on buses purchased for the purpose of t<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nThe Reply:
\nSir, In this case also, I am of the view that ITC on the expenses incurred to run a bus, is not available. As this is the facility extended to the employee by the employer, this service is not obligatory for an employer to provide to its employee under any law for the time being in force. However, as there are various decision in the erstwhile law allowing the Credit as input service but that depends upon the facts and circumstances of the case. Further, it is onus on the assessee to prove the nexus.
\nRequest for comments.
\nThanks
\nReply By JSW CEMENTLIMITED:
\nThe Reply:
\nSir
\nPresently, most of the companies are located in remote areas away from the city, and almost all the companies are providing pick and drop facilities to its staff and sub-staffs for the reason that they reach office and plant in time so that production is not hampered. This facility may be seen as a facility given to employee for the benefit of business only. Unless there is busine<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nReply By JSW CEMENTLIMITED:
\nThe Reply:
\nKasturi sir
\nI respect your interpretation and experience also. Still I am not convinced as to why we are comparing employees with passenger, employer employee relationship and all. The service is not falling under rent a cab service where eligibility is restricted except it is performed under as an obligation under some law, it can not be said to be a welfare facility, it is used for furtherance of business, it helps people to reach workplace in time attend to their duty timely,. Directly or indirectly it has a bearing on the manufacturing business, still all the experts are negative towards eligibility.
\nReply By Alkesh Jani:
\nThe Reply:
\nSir, I agree that by way of d<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nPlease offer your comments and correct me if mistaken.
\nThanks,
\nReply By Anubhav Bansal:
\nThe Reply:
\nDeal All,
\nI went through entire discussion in this thread which mainly is on eligibility of ITC in this case of services.
\nNow, I seek experts opinion on what will be the GST treatment of this service in hands of the Company when they are giving this service to employees i.e. will it be consider as "supply" in terms of the provision of CGST act and will company have to discharge GST liability in case:-
\n1. When the company is recovering partial amount towards this servic<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nThe Reply:
\nWhat is specified in Section 25 as referred to in entry no.2 of schedule I
\nReply By Anubhav Bansal:
\nThe Reply:
\nDear JSW ji,
\nExtract of Section 25 for ready purusal:
\n"ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION 1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets. 2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business: Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both."
\nFurther, as per the explanation to section 15, for the purposes of CGST Act:-
\n(a) persons shall be deemed to be "related persons" if –
\n(i) ………..;
\n(ii) ……..;
\n(iii) such persons are employer and employee;
\nConjoint reading of this 2 provisions of t<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nFurther, it is advisable to the person, rather than hiring a person for providing such transportation services, the manufacturing company should employ someone to run such buses at its own cost. This will somehow save the commission cost being paid by the manufacturing company to the person.
\nReply By HIREGANGE& ASSOCIATES:
\nThe Reply:
\nMy views are as below:
\na): 17 (5) (a) not applicable as it blocks credit on "supply of motor vehicles" when supplied "as such" but not on the services provided by using such motor vehicle. Accordingly, no need of considering definition of passenger\/employee etc.
\nb) Restriction in 17 (5) (iii) is on the rent a cab not renting of motor vehicle. Erstwhile Cenvat Credit Rules excluded from the definition of input services "services provided by way of renting of a motor vehicle". If the intention of law makers under GST was to disallow credit on buses, they could have used similar language. (i.e. motor vehicle <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nReply By Mahadev R:
\nThe Reply:
\nI wish to agree with Mr.Venkat Raman, Credit restriction should be in relation to motor cab or maxi cab which would cover upto 12 persons. In other cases, credit should be allowed and it would be allowed as gradually credits would become more seamless in future.
\nReply By YAGAY and SUN:
\nThe Reply:
\nGet it clarified from the Law Makers as there are certain words on which no definition is provided in the GST Law.
\nReply By Anubhav Bansal:
\nThe Reply:
\nDear Venkat Ramanji,
\nThanks for sharing the extract of those advertisement. After reading it, I am of the opinion that your conclusion basically is relied upon following extracts of the advertisment "it follows therefrom that supply by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST. "
\nIf this be the case then even the partial recovery form the employee can be said to be a<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n(i) for making the following taxable supplies, namely:-
\n (A) further supply of such vehicles or conveyances ; or
\n (B) transportation of passengers; or
\n (C) imparting training on driving, flying, navigating such vehicles or conveyances;
\n (ii) for transportation of goods;
\nBased on above, it is clear that law has very specifically conveyed that ITC is available ONLY for taxable supply i.e. (i) further supply of such vehicles, (ii) for transportation of passengers or goods and (iii) imparting training. In my point of view drop and pick up of employee does not fall within this “namely” services. Moreover, supplies to employer to employee has specifically mentioned in Section and schedules, wherever, benefit is to be granted. So only those supplies including gifts, where specifically mentioned is available to employer. So, I am of the view that ITC is not available.
\nThanks
\nReply By Anil Sood:
\nThe Reply:
\nFriends let us have a look at the Apportionment & bl<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n (ii) membership of a club, health and fitness centre;
\n (iii) rent-a-cab, life insurance and health insurance except where
\n(A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or
\n(B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply; and
\n(ii) travel benefits extended to employees on vacation such as leave or home travel concession;
\nNow, if we look at the definition, the credit of motor vehicle is inadmissible except in the case of buses owned by the Employer becau<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n