GST ITC CREDIT on Canteen Bills and Shoe Uniform bills - eligibility - reg

[venkataraman swaminathan]

Dear Sir,

We are a job worker, manufacturing Automobile components on the Materials given by

our Customer. We got Factory Licence for 250 Persons & IOF Fee paid for 250 persons ,But our actual Attendance strength is less than 200 /250.

Based on Statutory requirement , as per Factories act, we are providing uniforms /shoes /& other welfare measures mask /ear plug/ & also providing food in our canteen ,& food is purchased from outside Catering Co. Request for guidance on the following querry / clarificaitons please.

1. Can we take GST - ITC Credit from 01.02.2019 based on our vendor's Canteen food (outdoor catering) provider Bills .

2. Can we take for our purchases intended for workers/staff for shoes/ uniforms etc..

3. We are doing recovery of food cost @ concessional rate from our own employees say at ₹ 2 per day . Any GST liability on this recovery from our own employess.

If GST is payable, Can we take IT C Credit

4. We are also engaging outside contract man power for factory operations for which from them we are recovering food Cost @ ₹ 5 per day for which at what rate & what cost we need to pay GST liability . ( actual food cost per day ₹ 78/ - ).

Reqeust guidance please.

thanks

v swaminathan

[Ganeshan Kalyani]

1. If it mandatory by law to provide food facility then input tax credit can be taken.

2. Yes input tax credit allowed as the purchase is in course or furtherance of business.

3. Gst is payable on the amount recovered from the employee. No question of ITC as it amounts to outward supply.

4. Gst is payable on the amount recovered from the contract manpower.

[CASusheel Gupta]

As per section 17(5), ITC is not blocked since in your case it is mandatory under law to provide canteen services to employees. Therefore prima facie it seems that you can take ITC.

However, the GST rate of 5% is without ITC and you are not eligible to take ITC.

Employees are related party and as per Rule 28, the valuation for the purpose of GST payment has to be at open market value which is ₹ 78/- in your case.

CA Susheel Gupta

9811004443

[Ganeshan Kalyani]

5% GST without ITC is applicable to the supplier. He cannot take ITC. But the recipient can take credit. Am I right Sir.

[CASusheel Gupta]

Recipient can not take credit since it is blocked under section 17(5).

However, a recipient say five star hotel can take ITC since it is charging 18%.

AI Summary

Automobile sector worker queries GST ITC eligibility for canteen and uniform expenses; ITC blocked under Section 17(5) unless at 18% GST. A job worker in the automobile sector sought guidance on the eligibility of claiming GST Input Tax Credit (ITC) for canteen and uniform expenses. They provide food and uniforms as per statutory requirements and recover a nominal fee from employees and contract workers. Responses indicated that ITC is generally permissible when the provision of these services is mandatory by law. However, GST is payable on the amounts recovered from employees and contract workers. The discussion highlighted that ITC is blocked under section 17(5) unless the service provider charges a higher GST rate, such as 18%.