Services to related party

[Kaustubh Karandikar]

Employees who are on the pay roll of XYZ are sometimes sent on outdoor duty for carrying out some work in relation to activities of PQR (Related Party). Expenses incurred for the same by the employee are reimbursed to him on voucher at actuals by XYZ. Will it amount to services provided to PQR and since XYZ and PQR are related, even if XYZ is not recovering any amount from PQR, XYZ will be liable to pay GST on it? If yes on what value?

AI Summary

GST Applicability on Reimbursed Expenses for Employees Working with Related Party Under CGST Rules, 2017 Discussed An individual inquired about whether expenses reimbursed by XYZ to its employees, who perform work for a related party, PQR, are subject to Goods and Services Tax (GST). Even though XYZ does not recover any amount from PQR, the question was whether XYZ is liable for GST. One response suggested consulting a Cost and Management Accountant (CMA) for proper valuation under CGST Rules, 2017. Another response indicated that transactions between related parties, including book adjustments, are considered payments and thus GST is applicable.