Reimbursement of Expenses

[Kaustubh Karandikar]

XYZ and PQR are related parties. Directors of XYZ Ltd. are using the Credit Card of PQR Ltd. The amount spent against the same is subsequently recovered by PQR from XYZ at actuals. Is PQR required to charge GST on this transaction?

AI Summary

GST Applicability on Related Party Transactions: No GST for Pure Financial Arrangements Without Service Element, No ITC for PQR XYZ Ltd. and PQR Ltd. are related parties, with directors of XYZ using PQR's credit card for expenses, which PQR later recovers from XYZ at cost. The query is whether GST should be applied to this transaction. Amit Agrawal suggests that if the transaction is purely financial with no facilitation charges, GST is not applicable, and PQR should not claim Input Tax Credit (ITC). Shilpi Jain agrees, stating no GST liability if it's just a payment arrangement. Ganeshan Kalyani, however, argues that if an element of service is involved, GST should be applied.