GST on cross charge/Reimbursement within India and outside India

[Shrikanth Parmarthy]

Hi experts,

Scenario 1:

Employee from Indian Company A travelled to Sister concern in Europe - Company B. The travel and hotel related expenses in Europe were borne by Company A and now the company A in India wants to charge those expenses to Company B without mark up. 

Query : Will the cross charge be treated as supply and GST is applied on the same. If yes what is the GST rate

Scenario 2:

Employee from Indian company A located in Tamilnadu travelled to Subsidiary Company in Maharashtra - Company B. The travel and hotel related expenses  were borne by Company A and now the company A in India wants to reimburse those expenses without mark up. 

Query:Will the cross charge  be treated as supply and GST is applied on the same. If yes what is the GST rate

AI Summary

GST on employee travel cost reimbursements between related entities, treated as supply at market value under Rule 28 An Indian company incurred travel and hotel costs for its employee visiting a related company in Europe and seeks to recover the exact expenses from that foreign entity without markup. A similar situation arises for an employee traveling from one Indian state to a related company in another state, with expenses to be reimbursed without markup. The query is whether these cross-charges/reimbursements constitute 'supply' under GST and, if so, the applicable rate. The professional response states that in both domestic and cross-border scenarios, cross charge is applicable on the market value of services provided, taxable at 18% GST.