The Curious Case of Advance Rulings on Recovery from Employees
Saturday Apr 28, 2018

The recent ruling pronounced by the GST Authority for Advance Rulings, Kerala on the taxability of recoveries made from employees by the employer will have an enormous rippling effect across the industry. It will trigger aspects of employer-employee relationship which, till now, seemed innocuous and outside the purview of GST.
The ruling essentially covers only the recovery made by the employer for food provided in the canteen run by it. Taking into account the facts that such canteen is mandatorily required to be provided under the Factories Act, 1948 and that the recovery is made purely at cost and there is no profit mark-up element involved, the ruling has considered this service as a taxable service under GST. Simple enough ? or so it seems.

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