GST on amount recovered from parent company

[Kaustubh Karandikar]

An employee of XYZ(India) had undergone an SAP Certification Programme. The fees were initially paid by the employee to the programme organizer outside India which XYZ subsequently reimbursed to the employee. The amount so reimbursed by XYZ was subsequently charged by XYZ to their parent company abroad. Is XYZ liable to pay GST on the amount charged to parent company?

[Rajagopalan Ranganathan]

Sir,

The SAP Certification Programme provided by programme organizer outside India. The said service is received by the employee of XYZ. For all practical purposes, the service is received by the XYZ though the fees were initially paid by the employee and later reimbursed by XYZ. In this case place of supply of service is location of the receiver since the service imported one. Therefore XYZ has to pay IGST under RCM. Taking reimbursement by XYZ from parent company will not attract gst since the amount reimbursed by the parent company is not consideration for any service provided by XYZ

[KASTURI SETHI]

I fully support the views of Sh. Ranganathan, Sir. I further add that the situation is covered under Section 13(3)(b) of IGST Act.

AI Summary

Reverse charge for imported services: recipient liable for IGST; reimbursement from foreign parent not treated as consideration. The SAP certification was an imported service received effectively by the employer, making the place of supply the receiver's location; the employer must pay IGST under the reverse charge mechanism on the imported service. Recovery of the reimbursed amount from the foreign parent is a reimbursement and does not constitute consideration for a service, and therefore does not attract GST.