Gst on the amount of re-reimbursement of expenses of branch  to H.O.or  H.O. to Branch.

[NILESH PITALE]

RESPECTED EXPERT

One Pvt Ltd. having No. of Branches in India.Head office is in Mumbai and having Gst No. and all branches also registered under GST.


Their business is to conduct event in different states. In beginning of year they always plan event date for whole year.They are having skill staff in Mumbai office and said staff visit in different state when event is conducted.

1. For Ticket Booking.

In beginning of year they book ticket of full year for their staff who is going to visit to event state. They make payment from credit card of Director.
H.O. Make payment to credit card issuing authority on behalf of all branches and debit to respective branch account.

When they book ticket of different state they provide H.O.Gst No to airline. Airline charge Sgst while going to another state and charge Igst while returning from that state to Mumbai.

2. For Hotel booking

When they book hotel of say Delhi they provide Gst no of Delhi and make payment to hotel authority from credit card. Delhi branch take set off of g
Gst.

Again Payment to hotel is from credit card of director and subsequently H.O. make payment to credit card Issuing authority and debit to respective branch

Other Expenses

When Mumbai staff visit to another state for event they have been given on account amount to each staff for some expenses of event.say ₹ 5000 to 10 staff and after completion of event they give details of expenses and take or return balance amount from H.O.

H.O.Pay to staff on behalf of all branches before and after event and H.O. debit to respective branch.

Now say for one event in Delhi H.O. Make payment as under.

1. For booking ticket ₹ 50000

2. For Hotel Charges ₹ 50000

3. For other Expenses RS. 25000

So Total Expenses of ₹ 125000 have been made by HO on behalf of Delhi branch. Now Delhi branch make payment to HO ₹ 125000

Query : Whether such type of transaction is valid means Delhi branch can make payment to H. O ₹ 125000.

Is there any issue of Gst on the amount of re-reimbursement of expenses of branch to H.O.or H.O. to Branch.

[Ganeshan Kalyani]

In my view, these kind of transaction are practical and therefore valid.

[KASTURI SETHI]

Sh.Ganeshan Kalyani ji is right. Here is decision of AAR, Rajasthan which will be helpful to the querist.

2018 (14) G.S.T.L. 596 (A.A.R. - GST) = 2018 (7) TMI 883 - AUTHORITY FOR ADVANCE RULING - RAJASTHAN IN RE : HABUFA MEUBELEN B.V.

AI Summary

Inter-branch reimbursements: transactions treated as valid; GST implications require assessment of taxability and input credit entitlement. Inter-branch reimbursements: a head office paid travel, hotel and event-related advances and debited branches for those expenses; the central issue is whether branch-to-head office reimbursements are permissible and whether GST is chargeable. Respondents advised such arrangements are practical and valid and referenced an Authority for Advance Ruling decision supportive of that view.