Applicability of GST on rent recovery amount from Employees

[Ramanathan Seshan]

Dear Experts,

I hope this message finds you well.

I seek your insights regarding the legal position concerning housing rent recovery from employee's salary in the following scenarios:

1. Company A (manufacturing entity) has rented an entire apartment from a landlord and provides it to its different employees for accommodation. The rent amount is deducted from the employees' salaries without any markup charged by the company. What is the legal position on this situation? Should the employee raise an tax invoice for such recoveries, if so, at what rate of tax? Are there any necessary disclosures in the GST return that must be made, and if so, under which table should these disclosures appear?

2. In a variant scenario where the employer charges a markup (say as a service charge or facilitation charge) on the rental amount, how does this affect the legal stance and disclosures? Should there be a separate invoice to be raised for the mark up?

Regards.

S Ram

AI Summary

GST Implications: Employer Rent Recovery from Salaries Analyzed for Tax Compliance and Reporting Obligations A manufacturing company sought guidance on GST implications of recovering apartment rent from employees' salaries. The discussion explored two scenarios: direct rent recovery without markup and recovery with a service charge. Expert responses clarified GST reporting requirements, tax rates, and supply classification, highlighting that direct cost recovery may be considered a perquisite outside GST scope, while markup-based recovery attracts 18% GST with mandatory GSTR-1 reporting.