TMI BlogRecovery of Hotel ExpensesX X X X Extracts X X X X X X X X Extracts X X X X ..... XYZ (India) is having a parent company PQR(Germany). Employees of PQR are coming to India for official work and their hotel expenses are initially paid by XYZ and then the same is subsequently recovered from PQR through a debit note. Is XYZ liable to pay GST on the amount recovered from PQR? - Reply By Amit Agrawal - The Reply = IF XYZ (India) is 'supplier' of subject services and PQ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R(Germany) is recipient of those services, THEN GST will be payable ( of course, excluding services falling under zero-rated supplies u/s 16 of the IGST Act, 2017 ). However, one needs to look into entire arrangements between Parent Co. and Indian subsidiary ( including who is providing what services to whom ), what was purpose / context of these business trips in those arrangements and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under what capacity the parent co. is reimbursing these expenses, before concluding that XYZ (India) is indeed 'supplier' of subject services PQR(Germany) is the 'recipient'. Because of multiple possibilities based on factual scenario (to be looked into in its entirety), I find difficulties to give my views - one way or other - on the issue raises only the basis of paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of certain expenses made by Indian subsidiary and its reimbursement from parent foreign Co. These are ex facie views of mine and the same should not be construed as professional advice / suggestion. - Reply By Radha Arun - The Reply = Prima facie no service is provided by the Indian entity. However, it's not clear who is invoiced by the hotel: if the Indian entity obtains the invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and avails ITC this would not be correct, as the service is not used by it. Another possible scenario can be that the Indian entity books the rooms and charges it to the overseas entity after adding a service fee. Here ITC would be available. - Reply By Shilpi Jain - The Reply = If this is a mere payment arrangement, no GST would be liable. So best would be that the Indian hotel issues invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the foreign entity, treats it as a B2C supply and there would be no liability in the hands of the Indian entity. If this is all part of any other service agreement/supply agreement the answer will change. - Reply By Kaustubh Karandikar - The Reply = Thanks Shilpi ji for your advice. - Recovery of Hotel Expenses - Query Started By: - Kaustubh Karandikar Dated:- 7-12-2022 Goods and Services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax - GST - Got 4 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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