gst rate for employee recovery

[Madhavan iyengar]

A Company recovers from its employees ₹ 500 per month per employee towards bus transportation

Query: What is the GST rate to be applied on the bus amount recovery is the rate of tax to be applied on basis of bill received from bus contractor @12% or we need to charge GST@18% being general service rate

[Ganeshan Kalyani]

in my view, 18%.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,. How you justify 18% rate ? For enrichment of my knowledge pl.

[Ganeshan Kalyani]

Company is providing a support service to the employee and therefore it cannot charge 12%. the applicable rate for support service is 18%.

[KASTURI SETHI]

Dear Querist,

Here is not the issue of business support. service. In my view, this activity/supply of service is covered under HSN 9964 (vi) attracting GST @ 5%/12%. However, if you feel any doubt, you may opt for filing Advance Ruling Application. For the time being, you can pay GST at higher rate under protest to avoid time bar limit. Otherwise also normally AAR takes the decision within in stipulated period.

[Ganeshan Kalyani]

Sir, company is not in the line of providing bus service therefore i took a view that it tantamount to support service .

[Madhavan iyengar]

kasturiji and kalyaniji thanks for your valuable guidance and inputs, what happens if there was no recovery ie bus service was free of cost should employer discharge gst on the entire billed amount by the bus service provider ( employer employee being related party) ?

[KASTURI SETHI]

It is a hypothetical question. It depends upon the nature of the contract. Who is service provider and who is service receiver ? Normally perks, amenities, various allowances are treated as part of salary given to the employee by employer. (No GST on salary). . If it is so, liability to discharge GST is cast upon the employer.

[Ganeshan Kalyani]

I agree with the views of Sri Kasturi Sir.

AI Summary

GST rate on employee transport: supply classification determines whether contractor rate or employer support-service rate applies. Determination of the applicable GST rate for employer recoveries for employee bus transport depends on whether the recovery is a passthrough of the contractor's service or a support service supplied by the employer; alternative classification under HSN 9964(vi) may attract lower notified rates. Where classification is uncertain, seeking an Advance Ruling is advised, and paying tax at the higher applicable rate under protest preserves rights pending resolution. If the employer bears the cost without recovery, GST liability depends on whether the benefit is treated as untaxed salary or as a taxable supply by the employer.