GST payable on Complete Billing amount including Employer portion of EPF & ESl Amount: AAR

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The West Bengal Authority of Advance Ruling (AAR) ruled that GST is payable on complete billing amount including employer portion of Employees’ Provident Fund  (EPF) and Employees’ State Insurance (ESl) amount. The applicant, Ex-servicemen Resettlement Society is a registered society providing security services and scavenging services (Karma Bandhus) to different Medical Colleges & Hospitals, District Hospitals, and other hospitals of the Government of West Bengal.

As per labor laws of the Government of West Bengal, the applicant claims Minimum Wage + Employer Portion of 13% EPF plus 3.25% ESI and charges tax at the rate of 18% leviable under the GST Act on gross bill amount in every month for providing security & Karma Bandhus (Scavenging) services to the Government Hospitals. However, the Audit Authority (Indian Audit and Accounts Department, West Bengal) in course of audit of Bankura Sammilani Medical College &. Hospital has raised the objection of excess payment of GST upon the observation that `GST’ to be payable only on Management Fees/Services Charges.

The applicant has sought the advance ruling on the issues of whether GST to be payable on Management Fee/Administrative charges only or otherwise complete billing amount and whether employer portion of EPF and ESl amount of the bill are exempted for paying GST. The coram of members Brajesh Kumar Singh and Joyjit Banik ruled that the provisions of the GST Act leave no room to deduct any amount like management fee, employer portion of EPF, and ESI for the purpose of determination of the value of supply under section 15 of the GST Act meaning thereby in the instant case, tax is leviable under section 9 of the Act on the entire billing amount.

Akshit Gadhia

Author of Tax Concept. Also, he is the Owner of Gadhia  Associate. The author is an avid reader and the author likes to write on various regulatory compliances. Currently, the Author Is pursuing CS, LLB, and ACCA. He has vast experience in Company Law and Roc Filings, Direct and Indirect Tax, Accounts, and Audits, and many other regulatory forms filings.

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