The charges of the canteen which used to collect from the employees will no more come beneath the compliance of goods and service tax now as mentioned under the tax ruling which provides some benefits to various bigger industrial and manufacturing units.
In the new ruling, the Gujarat Authority for Advance Ruling (AAR) specified that the GST will no more eligible upon the amount obtained on the canteen from the employees that was needed to furnish towards the canteen service provider.
The tax experts mentioned that this subject has become an issue among various firms that the employees needed to pay for the food to their canteen service provider under the current regulations. The majority of cases show that the token amount is collected from the employees.
AAR mentioned that in some situations where the firm is unable to make the gains on this amount and act as an intermediary then for them no GST is to be applied. In the previous two AAR rulings, a different view opted through 2 distinct heads.
Inside the case of Tata Motors, the AAR held that no GST will be liable to apply on these amounts but towards the concern of Amneal Pharmaceuticals, an opposite opinion was adopted under the ruling.
“The provision of canteen services for employees and GST payment thereon has been a matter of discussion across the industry and various rulings have been pronounced in favour of and against the applicant in the said matter,” said Rakesh Nangia, managing partner of Nangia Andersen India. “In the backdrop of differing opinions from various authorities, appropriate clarification from the Central Board of Indirect Taxes and Customs may put to rest this issue and enable the industry to adopt a correct clear view.”
The government holds that the banks can opt for the ITC of life insurance premiums in 2018 through the security guards, the hospitals take the credit for the medical insurance premium furnished through the nurses and the firms can avail the credit of canteen fees charged to labourers.
ITC is the process in which the GST filed through the firm or a bank upon input services or raw material can be set off with respect to the future tax liabilities.
The government rule points that the GST can be applied upon the canteen charges in some specific cases. The tax experts show that the exception renders that any service given through any employer which is essential under the law shall be subjected to the ITC.
The existing AAR rule opts for the next step. The AAR ruling reveals that any service furnished through the employer excluding a purpose to build the profit does not include GST.
