Services to related person

[Kaustubh Karandikar]

XYZ is carrying out job work for PQR. Both XYZ and PQR are related since having common directors. All the expenses incurred by XYZ such as salary, water bill, electricity bill etc. are initially borne by PQR and while paying the job work charges to XYZ, the same are recovered and net amount is paid to XYZ by PQR. Is PQR liable to pay GST on the amount initially paid for expenses on behalf XYZ being related persons?

AI Summary

GST on reimbursements: whether amounts paid and recovered between related parties for job work constitute taxable consideration. Query whether amounts paid by PQR on behalf of related job worker XYZ (salary, water, electricity, etc.) and recovered when paying job work charges constitute consideration attracting GST or are mere reimbursements excluded from taxable value, with determination depending on contractual allocation and the nature of the recoveries.