Reimbursement received of Stipend paid to Trainees exempted from GST: AAR [Read Order]

The Maharashtra Authority of Advance Ruling (AAR) ruled that reimbursement received of the stipend paid to trainees exempted from Goods and Service Tax (GST).

The Applicant Company, Yashaswi Academy for Skills is registered as an Agent under National Employability Enhancement Mission (NEEM). NEEM agent is a facilitator for extending support for mobilizing the trainees under the NEEM Scheme of the Government of India as per regulations under the notification issued by the All India Council for Technical Education (AICTE) for providing trainees on-the-job practical training in industries to enhance their future employability. For that purpose, NEEM agents enter into agreements with various companies/ organizations (called as industry partners) who impart actual practical training to the students.

The applicant has sought an advance ruling in respect of GST on reimbursement by Industry Partner to YAS of the stipend paid to students attracts GST.

The Coram of Rajiv Magoo and T.R. Ramnani held that the reimbursement by Industry Partner to the applicant (YAS), of the stipend paid to the trainees, does not attract tax under the GST Acts.

“it is seen that the applicant is only acting as an intermediary in collecting the stipend from the companies and then disbursing the same to the trainees in full since the applicant is not allowed to make any deductions from the stipend before disbursing the same to the trainees. The applicant is only a conduit for the payment of stipend and the actual service is supplied by the trainees to the trainer companies (industry partners) against which stipend is payable. Hence the amount of stipend received by the applicant from the industry partners and paid in full to the trainee is not taxable at the hands of the applicant. Hence, in view of the submissions made by the applicant and also in agreement with the observations made by the jurisdictional officer, it is held that the reimbursement by Industry Partner to the applicant of the stipend paid to students does not attract GST,” the AAR noted.

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