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APPliCAbiliTy of GST on reimburSemenTS of buSineSS exPenSeS To emPloyeeS

Before proceeding further, it is important to as such on behalf of the recipient in
understand who shall be treated as recipient relation to the goods or services or
of supplies, i.e., employee or employer as in both supplied.
view of section 9(4) actual recipient shall be In view of section 2(93), employee shall
liable to discharge the tax liability under be treated as an agent of employer, as the
reverse charge mechanism. Now as per employee has incurred expenses in the course
section 2(93), “recipient” of supply of goods of performing official duties on behalf of
or services or both, means— employer. Thus, in such case employer shall
(a) where a consideration is payable for the be treated as actual recipient of supply and
supply of goods or services or both, will be liable to discharge tax liability under
the person who is liable to pay that reverse charge mechanism. Further, company
consideration; shall be eligible to take input tax credit on
(b) where no consideration is payable for tax paid under reverse charge, subject to its
the supply of goods, the person to eligibility under sections 16 & 17(5) of the
whom the goods are delivered or made CGST Act, 2017.
available, or to whom possession or 6.2 Scenario after 13-10-2017 - Section 9(4) of
use of the goods is given or made the CGST Act, 2017 casts liability to discharge
available; and taxes on registered recipient where goods

(c) where no consideration is payable for or services are procured from unregistered
the supply of a service, the person to supplier. However, the same has been deferred
whom the service is rendered, and till 31-3-2018 vide N/N 38/2017 dated 13-10-
any reference to a person to whom a 2017. Hence, employer shall not be liable to
discharge tax liability under reverse charge
supply is made shall be construed as mechanism in case of reimbursement claimed
a reference to the recipient of the sup- by employee for supplies received from
ply and shall include an agent acting unregistered dealer.

7. Taxability of various expenses reimbursed by employer
Transaction Nature of Type of GST Input
Transaction Expense Applicability Tax Credit
Rent-a-cab Cab availed by Travel GST shall not applicable No credit shall be
employees for Expense since services are performed available due to
performing official by employee in course of restriction capped
duties, such as Tax employment. Hence, shall by section 17(5).
department visits, etc. not be treated as supply in
view of Schedule III.
Local Local conveyance availed Travel GST shall not applicable, Yes, if services
Conveyance by employees for per- Expense since services are performed availed from reg-
forming official duties. by employee in course of istered dealer*
employment.
Tours, Cab facility & local Travel GST shall not be applicable Same as discussed
Excursions & conveyance availed by Expense since services are performed above in the
Visits employees on tours. by employee in course of case of ‘Rent-
employment. a-cab’ & “Local
conveyance”.
Telephone/ -Reimbursement claimed Telecom- GST shall not apply if Mobile Yes, if services
Mobile by employees on actual munication is used for performing official availed from reg-
basis Expense duties. (However, in such istered dealer*
case it is very difficult to

116 January 20 To January 26, 2018 u Taxmann’s Corporate Professionals Today u Vol. 41 u 10