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GST ON EMPLOYEE REIMBURSEMENTS

Goods and Services Tax - GST - By: - Pradeep Jain - Dated:- 13-11-2017 - Under GST regime, there have been a lot of issues regarding taxability of transactions between employer and employee and applicability of reverse charge mechanism on such transactions. Now, according to clause 1 of Schedule III of the CGST Act, 2017, any services provided by employee to employer in course or in relation of employment shall not be considered as supply. This means that consideration paid for such services sha .....

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the employer and hence such transactions will be considered as done by employer himself (merely payment made by employee on behalf of company would not be considered as supply received by employee). Therefore, in such cases section 9(3) and 9(4) of CGST Act shall come into picture. Now, these reimbursements shall fall under two heads which are: 1. Reimbursements to employees for expenses incurred from registered dealer If expenses incurred by employee are from registered persons then the employ .....

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on. Also there would be cases where company would be ineligible to claim input tax credit even if employee incurs expenses from registered parties like food and beverages services i.e. restaurant service, health services, etc as mentioned in section 17(5). 2. Reimbursements to employees for expenses incurred from unregistered dealer If expenses incurred by employee are from unregistered persons then also it will be deemed that the employer has received the said supply and the employee has merely .....

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C on the supplies received from registered person by the employee on behalf of company. This ITC is being availed on the grounds that expense is booked in the company's accounts and it is the company which has actually received the said supply in course or furtherance of business. However, in case of supply from unregistered dealer, the same company cannot take altogether different stand that the supply is actually received by the employee. If we take a stand while availing the ITC that supp .....

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