GST ON REIMBURSEMENT OF MANAGEMENT EXPS

[tejas kulkarni]

IS GST CHARGEABLE ON REIMBURSEMENT OF MANAGEMENT EXPS i.e. salary , maintainance exps.etc . if yes under which head of service.?

please Guide.

[Rajagopalan Ranganathan]

Sir,

In my view it is a composite supply of service. According to Section 2 (30) of CGST Act, 2017 "“composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;

Illustration. - Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply.

Therefore you have to classify and pay tax on the basis of principal service.

[Ganeshan Kalyani]

Sir, can you please elaborate your query.

[KASTURI SETHI]

As per Rule 33 of CGST Rules, if amount has been incurred as pure agent then the same is to be excluded from the transaction value to arrive at taxable value. Since you have not mentioned what is service, what is your marketing pattern etc., it is not possible to give a fool-reply. Your query needs further elaboration as pointed out by Sh.Ganeshan Kalyani Ji.

[tejas kulkarni]

the co operative society provides manpower supply service to sugar factory. It pays to contractors for rendering of farm labour for service of sugarcane cutting. For all this service it raise invoice to sugar factory.

However the society has its own management expences like salary , admin exps of society like medical exps of labours etc. All these exps are also reimbursed by sugar factory. Hence society's profit and loss A/c shows no profit no loss.

My querry is under which head of service such reimbursement of management exps are chargeable under GST.?

[Ganeshan Kalyani]

Sir, in my view, the management expense is also taxable as it would amount to service provided by your society to the sugar factory.

[KASTURI SETHI]

Chapter/Heading/Sub-heading No. is 998311. It is a composite supply. Principal supply is manpower supply. So GST Rate and Heading of Principal supply will apply. It is taxable. After elaboration of your query, I support the views of both experts. Read Section 15 (2) (b) & (c) of CGST Act carefully. No benefit of pure agent is available to you.

[YAGAY andSUN]

We are in agreement with the replies as shared by our Experts.

AI Summary

GST on Reimbursed Management Expenses: Classified as Composite Supply with Manpower Services as Principal Supply Under CGST Act A discussion on whether GST is chargeable on the reimbursement of management expenses, such as salaries and maintenance, was initiated by a cooperative society providing manpower services to a sugar factory. The society invoices the factory for labor services and seeks clarification on the GST implications for reimbursed management expenses. Experts in the forum suggest that these expenses are taxable, classifying them as a composite supply under the CGST Act, with the principal supply being manpower services. The applicable GST rate and heading should align with the principal supply, and no pure agent benefit is available.