GST on employee reimbursements.

Introduction Authority for Advance Ruling, Kerala has recently clarified that recovery of food expenses from the employees for the canteen services provided by company would come under the definition of outward supply defined in section 2(83) of the Act, 2017 and, therefore, would be taxable as a supply of service under GST. The interpretations done by the advance ruling authority have caused apprehensions regarding the taxability of other reimbursements, as such reimbursements may face the GST heat. The ruling, though solely based on the interpretation of the expressions 'business', 'composite supply'& 'consideration', nevertheless, the views taken in this advance ruling are worth discussions. Brief facts of the case M/s. Caltech Polymers Pvt. Ltd., Malappuram (hereinafter referred to as the 'Applicant') was engaged in the manufacture and sale of footwear. The applicant provided…

Rate of GST on restaurant services:

Query: Can restaurants avail input tax credit (‘ITC’) if they charge GST at the rate of 12% (Non – AC) 18% (AC) instead 5% on the sales made by them? Service tax regime: In earlier tax regime abatement of 70% was given on service tax levied on restaurant services by amending the notification No. 1/ 2006-ST, dated 01/03/2006 vide notification No. 34/2011-ST dated 25/04/2011. Therefore, rate of service tax was 4.5% instead of full rate of 15%. The abatement was available provided no Cenvat credit is availed either of inputs or inputs services. This abatement was only optional and not mandatory. Therefore, restaurants were eligible to ITC if restaurants charges full rate of tax (i.e 15%). Analysis: GST council on its 23rd meeting in Guwahati, had slashed the tax rate…