ITC on canteen

[Asked by Guest]

Dear sir,

we are manufacturing co. and having canteen facility also in co. premises.

third party is cooking here and raise invoice with GST to us., we are paying him with GST.

however company is charging nominal fee from employees.

in this scenario, ITC is eligible or not?

[JAIPRAKASH RUIA]

I Apologize to experts. The only intention of the post was that learners like me learn lot of thing from what experts post giving their valuable time and a detailed discussion add experience to us.We know that expert like you get very less time to communicate on such platform but still we expect that you all shower your knowledge and experience. Sir, You have a rich experience in Indirect taxation, I request you to be more active on discussion board and provide guidance to us. I also want to learn from my mistakes and assure to improve myself.

[KASTURI SETHI]

Sh.Jaiprakash Ji, . I agree with your views. This forum is read by so many legal luminaries. We are to learn from them. While choosing the words for this forum, we have to be very very careful.

[YAGAY and SUN]

We do agree with the concern as raised by Kasturi Sir that there should be on AAR.

GST: Govt to bring Centralized Authority for Advance Rulings http://www.taxscan.in/gst-authority-advance-rulings/24244/

[VaibhavKumar Jain]

Since you are recovering certain amount from employees, it amounts to supply and accordingly GST is liable to pay by you. The employee and employer are related party, under valuation rule, the value of supply is the value paid by you to the canteen contractor.

Since, you are the recipient and simultaneously providing canteen service, you can avail ITC on payment made to canteen contractor. The same ITC shall be utilized against your out put liability of canteen service only.

Finally, your GST liability shall be nil as the value of input service and outward supplies are same. However, you will show in your GSTR -1 as outward supplies and also ITC on your GSTR -3B and fully off set of ITC without further GST payment.

Gopabandhu

[Raghunath Gadre]

HI,

From July 2018 (Notification 13/2018 dt. 26/7/2018) Canteen contractor will charge 5% GST in his bill,

You can claim Input credit of the same.

You have to also discharge GST on RCM on fair market value of food supplied to your employee

AI Summary

Input tax credit for canteen supplies is constrained by catering exclusion, valuation rules, and GST rate/notification effects.
Whether a manufacturer may claim input tax credit on GST paid to a third party canteen contractor hinges on the statutory exclusion of food and catering from ITC, the exception permitting credit where inward supplies are used to make outward supplies of the same category, and valuation rules for related party supplies; administrative instruments such as AAR decisions and notifications fixing GST rates further affect eligibility and reporting obligations including potential reverse charge or fair market valuation implications.