CLOSE Latest News Home National Canteen services to employees will attract GST: AAR Canteen services to employees will attract GST: AAR Friday, April 13, 2018 IST National The ruling was given by the AAR on an application filed by Malappuram-based Caltech Polymers There are no free lunches under the GST, literally, with the Authority for Advance Ruling (AAR) saying that recovery of food expenses from employees for canteen services would attract the new indirect tax. The Kerala bench of the AAR in its order said recovery of food expenses from employees for canteen services provided by a company are taxable as a supply of service under the Goods and Services Tax (GST). The ruling was given by the AAR on an application filed by Malappuram-based Caltech Polymers. The company approached the AAR to seek advance ruling on whether recovery of food expenses from employees for canteen services would come under definition of outward supplies and attract GST. "... recovery of food expenses from the employees for the canteen services provided by company would come under the definition of 'outward supply' as defined in Section 2(83) of the Act, 2017, and therefore, taxable as a supply of service under GST," said the AAR order. Under the Factories Act, 1948, any factory employing more than 250 workers is required to provide canteen facility to its employees. Levying of GST on canteen services provided by employers would increase compliance burden of companies, PwC Partner and Leader Indirect Tax Pratik Jain said. "The revenue collections for the government in such cases is not likely to be substantial, given that input credit might be available to businesses in many cases. However, the compliance burden on industry would be significant, along with possible disputes on valuation," he said. The government, Jain said, should either provide some guidance on such aspects or consider providing an exemption from GST on such recoveries. He further said it was not clear whether GST would be levied at 5 per cent (without input credit) as canteen shall apply on all such recoveries from employees or a residual rate of 18 per cent will be applicable, treating it as outdoor catering services. Last week, the finance ministry had clarified that a 5 per cent GST will be levied on food and drinks supplied by the Indian Railways or IRCTC in trains, platforms or stations. This was done to bring uniformity in the rate of GST applicable to supply of food and drinks made available in trains, platforms or stations. AMRG & Associates Partner Rajat Mohan said this verdict would push up the cost of food for factory workers. "Also if such decisions are pursued from July 2017, we could see considerable tax demands in corporate sector with matching interest and penalties," Mohan said. Source : https://www.moneycontrol.com/news/business/canteen-services-to-employees-wi... 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A 70+ y old lady has cancer. </p> <div class="date_for_current"><strong>November 28, 2016 05:00 IST</strong></div> <div> <button class="report_readmore_button">REPORT ABUSE</button> </div> </div> <div style="border-bottom: 1px solid #f1f1f1; padding-bottom: 10px;"> <div class="date_for_dec2"> <strong style="color: #333;"> <div class="icon_name icons_class1"><a href="#" title="Shibu Chnadran">S</a></div> <!--<div style=" margin-bottom:5px; float:left;"><a href="#" title="Shibu Chandran"><img src="images/shibu.jpg" width="45px" height="47px" class="icon_name" alt="shibu"></a></div>--> <a href="#" style="text-decoration: none; line-height: 25px; color: #666;">Shibu Chandran</a></strong><br /> 2 hours ago </div> <p> Serving political interests in another person's illness is the lowest form of human value. A 70+ y old lady has cancer. </p> <div class="date_for_current"><strong>November 28, 2016 05:00 IST</strong></div> <div> <button class="report_readmore_button">REPORT ABUSE</button> </div> </div> <div style="border-bottom: 1px solid #f1f1f1; padding-bottom: 10px;"> <div class="date_for_dec2"> <strong style="color: #333;"> <!-- <div class="icon_name icons_class1"><a href="#" title="Shibu Chnadran">S</a></div> --> <div style="margin-bottom: 5px; float: left;"> <a href="#" title="Shibu Chandran"> <img src="images/shibu.jpg" width="45px" height="47px" class="icon_name" alt="shibu"></a> </div> <a href="#" style="text-decoration: none; line-height: 25px; color: #666;">Shibu Chandran</a></strong><br /> 2 hours ago </div> <p> Serving political interests in another person's illness is the lowest form of human value. 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