TaxTMI 
TaxTMI 
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?
Reimbursement of Expenses
30 Jul 2022 
4 Replies 
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GST on reimbursements: facilitation may attract tax while pure financial repayments between related parties do not.
GST applies only if the recovery constitutes a taxable service; genuine financial transactions treated as loans/repayments with no consideration are not supplies and do not attract GST. Ensure recoveries are booked as financial transactions, avoid claiming Input Tax Credit on related charges, and document arrangements to mitigate risk of deemed-supply disputes arising from facilitation of payments between related parties. (AI Summary)
GST applies only if the recovery constitutes a taxable service; genuine financial transactions treated as loans/repayments with no consideration are not supplies and do not attract GST. Ensure recoveries are booked as financial transactions, avoid claiming Input Tax Credit on related charges, and document arrangements to mitigate risk of deemed-supply disputes arising from facilitation of payments between related parties. (AI Summary)