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 on employee rent recovery: reimbursements without markup may be outside supply, markups create taxable supply requiring invoicing.
GST on employer recoveries hinges on transaction characterisation: reimbursements of landlord rent collected without markup are treated as pass-through perquisites outside the scope of supply and carry no GST; if the landlord charges GST employer cannot claim ITC, and if landlord does not charge GST the employer may have reverse charge liability with limited ITC. When the employer imposes a markup, the employer makes a taxable supply to employees, must invoice and discharge GST on the full amount, report it in outward returns, and may claim ITC subject to normal conditions.