TaxTMI 
TaxTMI 
TaxTMI 
Amount of Gratuity is Chargeable under GST or Not after Merger of companies.
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....mount of Gratuity is Chargeable under GST or Not after Merger of companies.<br> Query (Issue) Started By: - Khushi Kansal Dated:- 9-10-2025 Last Reply Date:- 10-10-2025 Goods and Services Tax - GST<br>Got 3 Replies<br>GST<br>There are two companies, Company A and Company B. Company A and Company B are the parent entities of their respective subsidiaries, namely A1 and B1. Subsequently, Company A a....
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....cquires Company B, and as a result, B1 also becomes a subsidiary of Company A. Prior to the acquisition, certain gratuity obligations relating to employees of Company B were pending. After the acquisition, Company A received funds from Company B (or its subsidiary B1) and discharged the gratuity liability of the said employees. The query is: Whether the transfer of funds from Company B (or B1) ....
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....to Company A, for the purpose of settlement of gratuity dues of employees of Company B, would qualify as a "supply" under Section 7 of the CGST Act, 2017 and thereby attract GST liability, or whether such transfer will be treated as a mere movement/settlement of funds not amounting to consideration for supply of goods or services? Reply By Sadanand Bulbule: The Reply: The transfer of funds from ....
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....Company B (or B1) to Company A for settlement of gratuity dues of Company B's employees does not constitute a "supply" under Section 7 of the CGST Act, 2017. Section 7 requires a supply of goods or services for a consideration in the course or furtherance of business. In this case, Company A does not provide any goods or services in return, receives no consideration, and the transaction is pur....
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....ely for discharging statutory employee liabilities. Therefore, it is merely a movement of funds to settle gratuity obligations and does not attract GST. Reply By KALLESHAMURTHY MURTHY K.N.: The Reply: Sir, The transfer of funds from Company B (or B1) to Company A for settling gratuity dues is merely a transfer of funds which does not constitute a "supply" under Section 7 of the CGST Act, ....
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....2017, since it is a contingent transaction, and not a consideration and not a supply of service as per Schedule III of the CGST Act. Hence, no GST is applicable. Reply By KASTURI SETHI: The Reply: Such transaction/activity is out of definition of "Service" as defined under Section 2(102) of CGST Act. Hence out of gamut of GST. <br> Discussion Forum - Knowledge Sharing ....