GST on Canteen Service and Bus Service - Company to Employees

[kiran kumar]

Dear Sir,

1. Our company situated nearly 30 km from city and for the same our Company own bus will run three shift to pick up and drop of employees. For this Bus service nearly company spent 2,00,000 per month (Contract Bus Driver, Cleaner, Diesel and Repair charges will be born by Company)

2. Our company provide utilities and Room in factory for Canteen contract for food preparation. Contractor will submit the monthly bill to company nearly 1.4 lacks without GST. Since his turnover not crossed 20 lacks.

My auditor asking our company need to pay the GST on above two Service (Bus Service 2 lacks and Canteen 1.4 lacks - Company provided service to Employees) - Requesting you to advise on this Issue.

Thanks & Regards,

Kiran Kumar

[Ganeshan Kalyani]

There is no GST on the expense incurred by the company. GST is on the outward supply of goods or service.

Is there any recovery being done from the employee towards the bus travel or food? If yes, then there is element of service.

[KASTURI SETHI]

(1) Self service is no service. It is out of definition of, 'supply of service'. From the framing of the query it appears that you are not recovering cost from your employee.

(2) Not taxable. The contractor is entitled to threshold exemption limit of ₹ 20 lakhs.From the framing of the query it appears that you are not recovering cost from your employee.

I also agree with the views of Sh.Ganeshan Kalyani Ji.

[Venkataprasad Pasupuleti]

I agree with the views of learned experts. GST is not liable unless something is recovered from the employees.

[SHARAD ANADA]

Please refer Para 2 of SCHEDULE I of CGST Act 2017 " ACTIVITIES OR TRANSACTION TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION"

2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business:

As employee is Related person (Sec. 15 Explanation.-For the purposes of this Act,––

(a) persons shall be deemed to be “related persons” if––

(iii) such persons are employer and employee;) and bus and canteen services provided to employee free of cost so its supply as per sch. I of CGST Act 2017. This will be considered as supply only if bus services and canteen service provided is not considered as perquisite and included in salary paid to employee. If such service is considered as perquisite and included in salary paid to employee then it will not be supply because it will cover in

Para 1 of SCHEDULE III of CGST Act 2017 "ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES"

1. Services by an employee to the employer in the course of or in relation to his employment.

Subject to above condition, In view its deemed supply under Sch I and GST will be applicable on such free supply.

In my view your auditor is correct

[YAGAY andSUN]

In our view, GST is not applicable unless untill any amount is recoverable from the employees.

AI Summary

GST Applicability on Employee Bus and Canteen Services: Key Insights from Schedule I of CGST Act A company located 30 km from the city provides bus and canteen services to its employees. The bus service costs the company 2,00,000 per month, while the canteen contractor charges 1.4 lakhs monthly, both without GST. The company's auditor questioned the GST applicability on these services. Forum responses indicate that GST is not applicable unless costs are recovered from employees, as these are not considered 'supply of service' under GST law. However, if these services are not treated as perquisites included in the employees' salaries, they may be deemed a supply under Schedule I of the CGST Act, making GST applicable.