In a relief to several large industrial and manufacturing units in Gujarat, the Authority for Advance Ruling (AAR) in Gujarat exempted canteen charges collected from employees from the gamut of goods and services tax (GST).
In a recent ruling, the AAR said that GST is not applicable on the amount collected from the employees towards canteen charges, which is paid to the canteen service provider, according to a report by The Economic Times. It added that this will be applicable only in cases where the company is not making any profits on this amount and merely acting as an intermediary.
According to the report, two of the earlier AAR rulings held very different views. In the case of Tata Motors, the AAR had ruled that GST is not applicable on such an amount while in the case of Amneal Pharmaceuticals, a contrary view was ruled. "The provision of canteen services for employees and GST payment thereon has been a matter of discussion across the industry and various rulings have been pronounced in favour of and against the applicant in the said matter," Rakesh Nangia, managing partner of Nangia Andersen India told the publication.
Experts feel that the matter can be brought to rest only if the Central Board of Indirect Taxes and Customs addresess the issue. "In the backdrop of differing opinions from various authorities, appropriate clarification from the Central Board of Indirect Taxes and Customs may put to rest this issue and enable the industry to adopt a correct clear view," Nangia added.
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