GST Applicability on Employee Reimbursement

[AnilKumar Vyas]

Dear Experts,

Please suggest, Is GST Applicable on following transactions:

• Payment to Employee for Vehicle running and maintenance charges at fix rate (example INR 8/- per KM) (Not part of Employee agreement and Salary offered)

  Example:

  We are paying INR 8/- per KM to X. during the month vehicle run 3,750 KM, Total amount paid INR 30,000/-

  Is company liable to pay GST on these reimbursement under RCM for supply from unregistered dealer?

• Payment to Employee for Vehicle petrol expenses at fix (Example 4,000/- per month) (It is part of salary offered but company separately paying for get income tax exemption by employee)

  Example:

  Mr. X monthly take home salary 40,000/- as per employment agreement. But company is paying 36,000/- as salary and paying 4000/- when employee request for reimburse vehicle fuel expenses.

  Is company liable to pay GST on these reimbursement under RCM for supply from unregistered dealer?

• Payment to employee for expenses done by employee on behalf of the company.

  Example:

  Mr. X is an employee and he purchased goods amount INR 6,000/- and get invoice in favor of company ( invoice not favor in invoice only show CASH MEMO) and made cash payment to supplier. Later X request to company for reimburse these expenses.

  Is company liable to pay GST on these reimbursement under RCM for supply from unregistered dealer?

Thanks for your valuable suggestion ........................

AI Summary

GST on employee reimbursements: employment-related allowances not taxable, but reimbursements from unregistered suppliers may attract reverse-charge liability.
Fixed payments for vehicle running and maintenance and separately paid fuel allowances that arise in the course or in relation to employment are not treated as taxable supplies. Reimbursements for goods purchased by an employee on the employer's behalf are treated as inward supplies; if the supplier is unregistered, reverse-charge liability may arise. The employer bears the burden of proving the absence of a taxable supply, and ITC claims may be affected where only cash memos exist.