18% GST on Reimbursement of Basic Salary, ESIC, EPF, Bonus: AAR [Read Order]

The Uttar Pradesh Authority of Advance Ruling has held that 18% GST on reimbursement of Basic Salary, ESIC, EPF, Bonus.

The applicant, Broadcast Engineering Consultants India Limited is a Central Public Sector Enterprise under the Ministry of Information Broadcasting and was established on 24th March, 1995 under the Companies Act, 2013 with 100% equity share capital held by Govt, of India. The applicant was awarded a contract from Madhya Pradesh Paschim Keshetra Vidyut Vitaran Company Limited (Govt. Entity) for providing “skilled, semi-skilled and Unskilled” manpower for miscellaneous work under the three circles, AGAR, JHABUA & SHIVPURL.

The applicant has sought the advance ruling on the issue of whether we should charge GST @18% for taking reimbursement of expenses i.e., Basic Salary, ESIC, EPF, Bonus with a service charge or only on service charge for providing pure service by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution And, whether this services i.e. taking reimbursement of expenses for deployed Manpower is NIL rated supply in GST.

The Coram of Vivek Arya and Abhishek Chauhan has ruled that GST is liable to be paid @18% (IGST) on the reimbursement of expenses i.e. Basic salary, ESIC, EPF, Bonus with the service charge.

The AAR further ruled that GST is payable on services i.e., taking reimbursement of expenses for deployed Manpower.

“It can be seen that Section 15(1) clearly stipulates that the value of supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. Further, sub-section (2) of Section 15 elaborates in detail, the items that are required to be included in the value of supply, whereas sub-section (3) of Section 15 specifically elaborates the items that are not to be included in the value of supply,” the AAR said.

To Read the full text of the Order CLICK HERE

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