GST on employee expenses

[Dhruv Dua]

Company A reimburses employees for the expenses incurred by them in the field (airfare / travel etc). Some of the invoices are in the personal name of the employee and some in the name of the company.

Whether Company A is required to pay reverse charge on applicable reimbursements (employee pays to Goods transport agency for shifting of goods for example) ?

AI Summary

Reverse charge mechanism requires companies to pay GST on employee-paid reimbursed freight when the company bears the expense.
When an employee pays suppliers (for example a Goods Transport Agency) for services on behalf of the company and is reimbursed, the company is liable to pay GST under the reverse charge mechanism (RCM) because it bears the expense. The same view is held for purchases paid by employees and reimbursed where RCM applies. Company policy must be examined to determine whether the expense is incurred by the company or is a fixed reimbursement, which also raises income-tax and TDS considerations.