canteen ITC

[Madhavan iyengar]

In case of a company which has provided a canteen facility ( ie eating place) with food served by caterer.

First Scenario

Caterer has following billing pattern he charges 5% GST. Company recovers part amount from employee

Issue: Whether Company can discharge GST on recovered amount from employee @5% or company has to discharge gst on full value of canteen bill

will valuation rule come into play since employer and employee are related party

Second scenario: Caterer charges 18% GST and Company discharges gst @18% on the entire canteen bill ( company recovers only part amount from employee)

in above case can company claim the itc of canteen ??? will it fall under the exception to sec 17(5) ie like supplies

AI Summary

GST on Canteen Services: Pay on Full Bill, Claim ITC Only If Mandated by Law, 5% Rate Applies A forum discussion focuses on the Goods and Services Tax (GST) implications for a company providing canteen facilities through a caterer. The primary issues are whether the company should pay GST on the full canteen bill or only on the amount recovered from employees, and if Input Tax Credit (ITC) can be claimed. Responses clarify that GST should be paid on the full canteen bill value due to the employer-employee relationship. ITC can be claimed if canteen services are mandated by law. A notification specifies a 5% GST rate on canteen services without ITC, impacting the tax treatment and cost to the company.