GST on rent of employee paid by employer

[Kaustubh Karandikar]

1) Employees of XYZ Ltd. are staying in a rented flat and rent for the same is paid by XYZ.

2) Employees is paying house rent and recovering from XYZ. Under both these situations, since employee is treated as related persons as per GST provisions, it will be treated as service provided to employees and therefore XYZ will be liable to pay GST on it under forward charge even if there is no consideration received by XYZ? Views of the experts please.

AI Summary

Debate on GST Applicability for Employer-Paid Employee Accommodation Rent and Input Tax Credit Eligibility under Circular No. 172/04/2022-GST. The discussion revolves around whether GST applies to rent payments made by an employer for employees' accommodation. XYZ Ltd. pays rent for employees or reimburses employees who initially pay it. Questions arise about GST liability since employees are considered related persons under GST provisions. According to Circular No. 172/04/2022-GST, perquisites provided by employers to employees under contractual agreements are not subject to GST. Additionally, renting residential dwellings for residence is generally exempt from GST, but this exemption is withdrawn for registered business entities. The discussion also touches on input tax credit (ITC) eligibility and potential disputes.