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Transportation of Employees

Goods and Services Tax - Started By: - Kusalava InternationalLimited - Dated:- 8-5-2018 Last Replied Date:- 22-6-2018 - we are mfg co and provide transportation facility to employee from home to factory and factory to home for that we have purchased bus and given to one person(Unregistered Person) to run bus.For that we are paying every month bill to him.(including Diesel,Driver Salaries and his commission)1.What is the rate of GST to be charged on Bill if he is registered?Please refer SAC Code. .....

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or transportation of goods means commercial use of such vehicles for transporting either passengers or goods. If the taxable person transports its own employees free of cost it will not be covered by the aforesaid clause and hence he will not be able to claim benefit of Input Tax Credit in respect of the same. - Reply By KASTURI SETHI - The Reply = is never free. - Reply By Kusalava InternationalLimited - The Reply = Thanks for reply - Reply By Ganeshan Kalyani - The Reply = GST is applicable a .....

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e cannot be classified in the nature of personal consumption either as the activity is related to business only. Further this transportation service cannot be classified under rent-a-cab service. As such, I feel, GST input tax credit is available in this case. would invite experts counter opinion on this. - Reply By Alkesh Jani - The Reply = Sir, For ready reference please allow me to reproduce relevant portion of Section 17(5) of CGST, Act, 2017. (5) Notwithstanding anything contained in sub-se .....

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ed below:- According to Section 65 (20) cab means (i) a motorcab, or (ii) a maxicab, or (iii) any motor vehicle constructed or adapted to carry more than twelve passengers, excluding the driver, for hire or reward: According to Section 65 (71) motor cab has the meaning assigned to it in clause (25) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988); accordingly Motor Cab means any motor vehicle constructed or adapted to carry not more than six passengers excluding the driver for hire or r .....

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-a-cab service. Based on above, I am of the view that ITC is not available in the instant case. Our experts may correct me if mistaken. Thanks - Reply By KASTURI SETHI - The Reply = Sh.Alkesh Jani Ji, Top most reply. Crystal clear interpretation. - Reply By JSW CEMENTLIMITED - The Reply = Sh Alkesh Janiji, appreciate your analysis. But, still I am of the same view that credit of service provided by using the company's bus is available to a manufacturer on the following ground. In the absence .....

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the Motor Vehicle Act, 1988 and transportation of employee in a bus is purely used in furtherance of business of the company. These services are used indirectly for the day to day activity of the plant viz; production, accounting, HR etc. I could not find the definition of Cab in Motor Vehicle Act as it was defined in Section 65(20) of Finance Act. I would invite opinions all the expert if at all they are still in dis-agreement with my view. Regards, V.Venkat Raman - Reply By Alkesh Jani - The R .....

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f the space which controls the motor vehicle. The bus falls as motor vehicle having capacity of carrying more than 12 passengers and falls with the ambit of Rent-a-cab service. Repeating that an employee cannot be termed as passenger . If I accept your contention that bus is not a cab then too it is covered under Section 17(5)(a)(i)(B) of CGST Act, 2017, ITC with regards to motor vehicle except for transportation of passenger, is not available. Let me thank Sh. Kasturiji,Sir for expressing their .....

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ich can be in normal parlance said to be cabin and in legal parlance cab means either a motor cab or a maxi cab as defined in section 2 of Motor Vehicles Act, 1988.As I earlier explained the queriest is not asking about the eligibility of ITC on buses purchased. Any ITC is available to a recipient of motor vehicle will be only on two cases i.e. i) he uses such motor vehicles for supply of taxable services, viz; passenger transportaion etc ii) uses such vehicle for transportation of goods.The mai .....

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employee under any law for the time being in force. However, as there are various decision in the erstwhile law allowing the Credit as input service but that depends upon the facts and circumstances of the case. Further, it is onus on the assessee to prove the nexus.Request for comments.Thanks - Reply By JSW CEMENTLIMITED - The Reply = SirPresently, most of the companies are located in remote areas away from the city, and almost all the companies are providing pick and drop facilities to its st .....

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sonal consumption of employee is ineligible but here we can not say that facility is given for personal consumption bit it is given for smooth running of plant. As such I strongly believe if at all department challenge, they will loose at higher courts. I would invite all other expert also to take part in this discussion so that correct stand can be taken. - Reply By KASTURI SETHI - The Reply = After a lot of deliberations after going through all the replies I am of the view that ITC is not avai .....

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ntext. - Reply By JSW CEMENTLIMITED - The Reply = Kasturi sirI respect your interpretation and experience also. Still I am not convinced as to why we are comparing employees with passenger, employer employee relationship and all. The service is not falling under rent a cab service where eligibility is restricted except it is performed under as an obligation under some law, it can not be said to be a welfare facility, it is used for furtherance of business, it helps people to reach workplace in t .....

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take time to reach its maturity level. The credit was not available in the erstwhile law and same is not available in GST also. The thing strike me is that although motor vehicle is mentioned at Section 17(5), where HSN code pertaining to Rent-a-cab is not available and same is also mentioned in same Section of the Act. The reason I find is that the intention of the government is clear of not allowing the ITC in this regards, mentioning Rent-a-cab in section and motor vehicle in same section is .....

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s may not be expected or favorable. The case law, as on now, have not attained its finality, I may agree with the contention in future. Please offer your comments and correct me if mistaken. Thanks, - Reply By Anubhav Bansal - The Reply = Deal All,I went through entire discussion in this thread which mainly is on eligibility of ITC in this case of services.Now, I seek experts opinion on what will be the GST treatment of this service in hands of the Company when they are giving this service to em .....

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D - The Reply = In case the Company is recovering any amount from the employees, then it should be a supply with some consideration and GST would be applicable. If the Company is providing services free of cost to the employees then the service without any consideration will not be a supply as such no GST liability would arise. - Reply By Anubhav Bansal - The Reply = I beg to differ here in case when it is provided free of cost. Would like attention on Entry 2 of Schedule 1, which says, activiti .....

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business assets where input tax credit has been availed on such assets. 2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business: Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both. Further, as per the explanation to section 15, for the purposes of CGST Act:- (a .....

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by an employer to all employee free of cost, then it is not taxable as per Press release dated 10th July 2017 released by GST Council. the Text of the same is given below for your reference. PRESS RELEASE It is being reported that gifts and perquisites supplied by companies to their employees will be taxed in GST. Gifts upto a value of ₹ 50,000/- per year by an employer to his employee are outside the ambit of GST. However, gifts of value more than ₹ 50,000/- made without considerat .....

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an employee to the employer in the course of or in relation to his employment is outside the scope of GST (neither supply of goods or supply of services). It follows therefrom that supply by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST. Further, the input tax credit (ITC) scheme under GST does not allow ITC of membership of a club, health and fitness centre [section 17 (5) (b) (ii)]. It follows, th .....

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= According to my view, it shall be covered under heading 9964 as passenger transportation services which is exigible to tax @ 5% provided that credit of input tax charged on goods and services used in supplying the service, other than the input tax credit of input service in the same line of business (i.e. service procured from another service provider of transporting passengers in a motor vehicle or renting of a motor vehicle), shall not be available to the person.It shall be covered under the .....

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CIATES - The Reply = My views are as below: a): 17 (5) (a) not applicable as it blocks credit on supply of motor vehicles when supplied as such but not on the services provided by using such motor vehicle. Accordingly, no need of considering definition of passenger/employee etc. b) Restriction in 17 (5) (iii) is on the rent a cab not renting of motor vehicle. Erstwhile Cenvat Credit Rules excluded from the definition of input services services provided by way of renting of a motor vehicle . If t .....

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d be allowed. But yes, the matter could be litigated as not free from interpretational issues. - Reply By KASTURI SETHI - The Reply = Cab is also a motor vehicle. When it is specifically excluded, direct or indirect bearing in the business or furtherance of business has no value. There are case laws to this extent pertaining to pre-GST era. When we say it is not litigation free, then who would like to take risk ? In such situation one should resort to Advance Ruling Authority instead of paying i .....

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ers as there are certain words on which no definition is provided in the GST Law. - Reply By Anubhav Bansal - The Reply = Dear Venkat Ramanji,Thanks for sharing the extract of those advertisement. After reading it, I am of the opinion that your conclusion basically is relied upon following extracts of the advertisment it follows therefrom that supply by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST. .....

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proved significantly with this post. I request all the expert involved in this post to be more active and provide the guidance to learner as they are amazing and earned enormous experience in this field.Reference of Section, rule and circular and press release are just amazing. Let us maintain this quality. - Reply By KASTURI SETHI - The Reply = Sh.Jai Prakash Ji,. Thanks for encouraging the experts of this forum. - Reply By Alkesh Jani - The Reply = Sir, In this regards, please allow me to repr .....

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. (i) further supply of such vehicles, (ii) for transportation of passengers or goods and (iii) imparting training. In my point of view drop and pick up of employee does not fall within this namely services. Moreover, supplies to employer to employee has specifically mentioned in Section and schedules, wherever, benefit is to be granted. So only those supplies including gifts, where specifically mentioned is available to employer. So, I am of the view that ITC is not available. Thanks - Reply By .....

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available in respect of the following, namely: (a) motor vehicles and other conveyances except when they are used- (i) for making the following taxable supplies, namely:- (A) further supply of such vehicles or conveyances ; or (B) transportation of passengers; or (C) imparting training on driving, flying, navigating such vehicles or conveyances; (ii) for transportation of goods; (b) the following supply of goods or services or both- (i) food and beverages, outdoor catering, beauty treatment, he .....

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