GST on EPF, ESI, Salary or wages component reimbursed by the client
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Case Details: |
Bhagyalakhsmi Devamma Vangimallu |
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Appeal No.: |
Advance Ruling No. TSAAR Order No. 14/2021 |
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Ruling pronounced by: |
GST AAR Telangana |
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Date of Ruling: |
08-10-2021 |
Brief Facts:
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The applicant has entered into a contract with M/s Asian Institute of Gastroenterology Private Limited, Hyderabad (Hospital) for providing housekeeping services. They are passing on the salary, ESI, PF, etc. received from the hospital to the persons employed in housekeeping. The same is passed on to the persons employed. However, they are charging commission/ charges against each such bill. Therefore, in their view, they are pure agents of the hospital and as such the amount received by them and passed on to the employees does not form turnover at their hands. |
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Therefore, in view of the above understanding of the applicant, they sought clarification regarding the issue that whether the total amount received from the hospital is liable for GST or only the commission received by them is taxable. |
Observations of the Authority:
The applicant is not a pure agent under GST Law. Further, the deductions available under section 15 of the CGST Act, 2017 do not include the amounts pertaining to EPF, ESI, Salary, or Wages. Therefore, the entire amount received from the hospital is liable for GST.
Question & Ruling:
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Question Raised |
Advance Ruling Issued |
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Whether or not the applicant is liable to pay tax on the amount of wages/ salaries, EPF/ESI, etc. reimbursed by the client? |
The applicant is liable to tax on all the amount received from the hospital. |
Disclaimer: The article is based upon the advance ruling passed by the Hon’ble Telangana Authority and is meant for informative purposes only. Readers are requested to act diligently and under consultation with a professional before applying the information contained in this article.
