GST will not be levied on canteen charges collected from employees

GST will not be levied on the amount paid by the employees for the canteen facility. The Advance Decision Authority (AAR) has given this arrangement. Tata Motors had approached the Gujarat Bench of AAR seeking information on whether the nominal amount collected by its employees for the use of canteen facility from them would attract GST. The AAR said that the employees will not have to pay GST for the canteen charges.

Apart from this, the company had also asked whether the facility of Input Tax Credit (ITC) will be available on the GST charged by the service provider on the canteen facility provided to the workers working in the factory.

The AAR has said in its decision that Tata Motors has arranged a canteen for its employees, which is being operated by a third party service provider. Under this arrangement, the company is bearing a part of the canteen fee and the rest is being borne by the employees.

The canteen fee for the employees’ share is collected by the company and given to the canteen service provider. Apart from this, Tata Motors has also said that it does not keep its profit margin in collecting canteen fee from the employees. The AAR said ITC for GST payment at canteen facility is a restricted credit under the GST law and the applicant cannot avail the same.

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