GST leviability on reimbursement expenses

[phaniraju konidena]

Dear Experts,

We have reimbursed the PF and E.S.I expenses of our production contractor's workforce as per the agreement in between us. Kindly advise whether there is any GST liability on us?. We have not received any services/goods from the contractor for such amount.

regards,

phani

[Rajagopalan Ranganathan]

Sir,

You are availing 'Man Power supply service by your contractor. Hence you are liable to pay GST under reverse charge mechanism if your contractor is not body corporate. If your contractor is body corporate then liability to pay GST is on your contractor.. GST is payable on entire amount charged by your contractor, that is, including P.F. and ESI expenses whether GST is paid by you under RCM or GST is paid by you contractor.

[phaniraju konidena]

Sir,

GST along with the P.F and E.S.I is being paid by the contractor on manpower supplies whereas we are only reimbursing the expenses of statutory expenses (P.F & E.S.I) as per agreement.

[KASTURI SETHI]

Man power supply is not under RCM. It is under FCM. Liability is of service provider. GST is payable on salary, PF, ESI, supervision charges etc. See Section 15 (2)(b) of CGST ACT Security Agency Services are under RCM if provided to a registered person.It is w.e.f. 1.1.19 Serial no.14 of Notification No.13/17-CT(R) dated 28.6.17 as amended refers.

[phaniraju konidena]

Thank you sir

AI Summary

GST on reimbursed statutory labour contributions depends on manpower supply classification and reverse or forward charge liability.
GST on reimbursed PF and ESI depends on whether the transaction is a manpower supply service and whether tax is payable by the contractor or under the reverse charge mechanism by the recipient. If the contractor charges and pays GST on manpower supply, reimbursements form part of the contractor's taxable value; if not and reverse charge applies, the recipient may be liable. Manpower supply is commonly treated under forward charge with provider liability, though specific services (e.g., security agency services to a registered person) can attract reverse charge.