Services supplied to employees

[Kaustubh Karandikar]

House Rent and Tea and food expenses of the employees are paid by the company. There is no mention in the employment contract regarding such facilities. Will it amount to employer supplying service to employee and chargeable to GST? In my view yes.

[ABHISHEK TRIPATHI]

Dear Kaustubh Sir,

“In the course of or in relation to his employment” is much wider than just framing into the box of written contractual agreements. When we try to frame this only w.r.t. to black words of written contractual agreement then we are missing ‘in relation’ phrase, which I think is much wider.

So, for me, it might be covered under Sch. III and not taxable.

[Rajagopalan Ranganathan]

Sir,

I concur with your view.

[Ganeshan Kalyani]

I agree with the view of the experts.

[KASTURI SETHI]

Dear Sir,

In support of replies of experts, also go through the decision of AAR (published on 20.8.21 in TMI 2021 (8) TMI 836 - AUTHORITY FOR ADVANCE RULING, GUJARAT IN RE: M/S. DISHMAN CARBOGEN AMCIS LTD.,

[Vinod TK]

In my view, the company has to pay GST.

AI Summary

Employee benefits supplied by employer may fall within Schedule III and be non taxable, though opinions differ. The issue is whether employer paid house rent and tea/food for employees amount to a taxable supply; multiple experts assert these benefits fall in the course of or in relation to employment and are covered by Schedule III as non taxable, while one view maintains GST is payable; an AAR decision is cited supporting the non taxable characterization.