No GST on top-up cover cost employees pay: AAR

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MUMBAI: The Maharashtra bench of the GST Authority for Advance Rulings (AAR) has held that restoration of an quantity in the direction of top-up of medical insurance and parental insurance coverage premium from staff just isn’t a supply and therefore not topic to items and providers tax (GST).
The AAR held that Tata Energy, which had sought this ruling, just isn’t rendering any service of medical insurance to its staff or their dad and mom and there’s no provide of insurance coverage providers. Therefore, the problem of levy of GST doesn’t come up. Nonetheless, it must be famous that the corporate had not availed of enter tax credit score for the GST charged by the insurance coverage firm. On this case, the AAR bench relied on the same ruling given in 2018 within the case of Posco India Pune Processing Heart.
These days, a number of AAR benches have adopted the same stand that GST can’t be levied in circumstances of restoration of sums from staff for a variety of providers, similar to a nominal quantity recovered for canteen providers and even parking. As reported by TOI earlier, the Gujarat bench of the AAR had held within the case of Tata Motors that GST wouldn’t be levied on the nominal quantity recovered from staff for canteen amenities, which is handed on by the corporate to the third-party caterer. Nonetheless, it had additionally added that enter tax credit score can be blocked.
In accordance with oblique tax specialist Sunil Gabhawalla, “The proper view is that there must be no restoration on nominal sums obtained from staff as there is no such thing as a taxable provide. If this line of argument doesn’t maintain good, it may be argued that the corporate is appearing as a pure agent and the worth of ‘providers’ must be taken as nil.”
For instance, within the case of Ion Buying and selling, a Noida-based subsidiary of a UK firm, the UP bench of the Appellate Authority for Advance Rulings had held that the parking prices collected from staff and handed on to the constructing authorities was a service. Nonetheless, it went on so as to add that the corporate certified as a pure agent. Thus, there can be no GST levy on sums collected from staff.

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