Beginners guide on Income Tax 2021: How to calculate payable Income tax?
August 17, 2021
GST On Second Hand Goods
September 8, 2021
No GST on canteen charges recovered from employees
In a ruling by the Gujarat bench, the Authority of Advance Rulings (AAR) has held that the canteen charges recovered from employees will not be liable to goods and services tax (GST). The applicant M/s Tata Motors Ltd. recovered a nominal amount each month from its employees, which was passed on by the company to the third-party caterer.
The applicant was not in the canteen service business, and the recovery of this nominal amount would not fall in the definition of “supply”. These amounts used to be deducted from the employee’s salary and paid to the canteen service provider. The difference between the amount paid to the service provider and the amount recovered from the employee was a part of their CTC. The Gujarat AAR ruled that GST is not leviable on the canteen charges collected from the employees. This judgment is consistent with the stand taken by the Maharashtra AAR in another case.
The company also clarified whether it could claim the input tax credit on the GST paid to the third-party caterer. The AAR, here, held that it is a blocked input tax credit under Section 17(5) of the CGST Act and is hence inadmissible.
