Goods and Services Tax

canteen ITC

GST – Started By: – Madhavan iyengar – Dated:- 11-1-2019 Last Replied Date:- 17-1-2019 – In case of a company which has provided a canteen facility ( ie eating place) with food served by caterer. First Scenario Caterer has following billing pattern he charges 5% GST. Company recovers part amount from employee Issue: Whether Company can discharge GST on recovered amount from employee @5% or company has to discharge gst on full value of canteen bill will valuation rule come into play since employer and employee are related party Second scenario: Caterer charges 18% GST and Company discharges gst @18% on the entire canteen bill ( company recovers only part amount from employee) in above case can company claim the itc of canteen ??? will it fall under the exception to sec 17(5) ie like supplies – Reply By Natarajan Ramakrishnan – The Reply = Dear Mr Madhavan, As pointed out the employer and employee are related person and squarly fall under Schedule I of the CGST Act. As per valuation rul

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at you are saying is GST is required to be paid whether there is part recovery / full recovery from employees for canteen and GST is required to be paid on the entire canteen bill ie the market value. b) sec 17(5)(b) – credit is not allowed for out door catering except when an inward supply of goods or services (b) the following supply of goods or services or both- (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; if u see above extract if canteen service provider has charged gst 18% and company has discharged 18% gst from employees for canteen services provided then will it not fall in above exception marked in bold thereby credit could be availed – Reply By Spudarjunan S – T

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tion. i.e. apportionment of common credits of taxable, exempted supply. Summarised – Sl.No Particulars Till 14.11.17 from 15-11-17 to 25-07-18 from 26-07-18 A For third party caterers 18% 18% 5% B Whether above (A) ITC eligible for Company Yes Yes – depends on tax rate opted by the company on its outward supply. No C Employer – Canteen services liability 12% 5% without ITC 18% with ITC 5% without ITC D Should include in exempt TO No Yes/No Yes E Rule 42 applicability No Yes, if 5% option opted. All the common credits would be reversed in proportion to 5% without ITC supply Yes. All the common credits would be reversed in proportion to 5% without ITC supply F Cost to Company – Depends 10% and reversal of common ITC. – Reply By KASTURI SETHI – The Reply = Dear Sh.Spudarjunan S.,. In view of the substance and clarity in your reply, I would not hesitate to say that you are possessing old head on young shoulders. Kudos to you. Keep it up. – Reply By Spudarjunan S – The Reply = Dear Shri.Kas

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