gst: Employers not require to deduct GST on subsidised meal price recovered from workers: AAR

Employers will not require to deduct GST on the subsidised meal price recovered from their workers, the Authority of Advance Ruling (AAR) stated on Tuesday.

The Gujarat bench of the AAR gave the ruling after Zydus Lifesciences approached the authority to hunt clarification on whether or not GST can be levied on the quantity deducted from the salaries of its workers who avail meals within the manufacturing facility/company workplace.

Zydus Lifesciences has entered into an settlement with the canteen service supplier in response to which it pays full quantity to the service supplier for the meals served throughout a prescribed interval on behalf of the workers. A pre-determined share of the quantity paid by Zydus Lifesciences is recovered from the workers and the stability quantity is borne by the corporate.

In its ruling, the AAR stated that the agency will not be liable to pay GST on the quantity deducted/recovered from the workers.

The agency collects the partial quantity from the workers and is required to pay the gross quantity inclusive of GST to the canteen service by including residual quantity within the workers’ portion and is required to pay gross quantity of invoice inclusive GST to the canteen service supplier.

Zydus Lifesciences has submitted that it doesn’t retain with itself any revenue margin on this exercise, the AAR stated, whereas ruling that GST wouldn’t be levied on the meal price recovered from workers’ wage.

“Subsidised deduction made by the applicant from the workers who’re availing meals within the manufacturing facility/company workplace wouldn’t be thought of a provide below the provisions of …. Items and Service Tax Act, 2017…,” the AAR stated.

EY Tax Associate Saurabh Agarwal stated the AAR has dominated that portion of meal price recovered from the wage of workers wouldn’t be thought of as ‘provide’ when it comes to GST regulation because the applicant solely acts as mediator for finishing the fee transaction and no provide really occurred between employer and worker.

This explicit difficulty has ambiguity since inception of GST laws, sure ambiguities had been eliminated by circulars issued in relation thereto although completely different pronouncements by advance ruling authorities has once more created snags.

“Some GST registrants have been paying GST on open market worth of meal in case half recoveries are comprised of the workers to keep away from undesirable litigation which is in the end turning into price to the enterprise. A clarification from CBIC on this difficulty would assist in bringing certainty of tax place for the business,” Agarwal stated.


(With inputs from PTI)