Gst on canteen subsidy

This query is : Resolved

ANIMESH PANDEY (Querist)
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09 April 2018 Dear Sir,
We are a private limited company , a canteen is run in our factory premises . We used to give subsidy of Rs.50000/- to the canteen owner per month . He raises bill for the food he supply to us and also for the subsidy .Note that he is an unregister party

Now my questions are:-
1)Would there be GST on this subsidy amount we are giving to him ??
2)Other effects if any of this ??

CA Suresh Jain

CA Suresh Jain (Expert)
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09 April 2018 Let us understand the transactions involved :
1. The canteen contractor provide the food to the employees of the company
2. based on the list submitted by canteen contractor the Company deducts x amount, calculated on the basis of number of day X rate per meal, from the salary of the employee
3. Apart from supply of meals to employees, canteen contractor supply meal to the guests of the Company
4. The canteen contractor raises the bill in the name of Company
Based on above :
It is clear that :
1. Supply of service by the canteen contractor is to the Company
2. In turn it is supply of service by the Company to the Employees
3. The valuation of the service is to the related person and should be valued at the arms length
4. The GST is to be paid by the Company on the service provided by it to its employees and value of which is shall be the amount deducted from the salary of employees plus Rs. 50,000/- assuming the meals of the guests were paid by the Company at full rate.

CA Suresh Jain

CA Suresh Jain (Expert)
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09 April 2018 This transaction can be planned legally not to attract GST

ANIMESH PANDEY

ANIMESH PANDEY (Querist)
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11 April 2018 Thanks Sir but so far i have studied of '' facilities provided by employer to employees ex. Refreshments (tea / coffee), lunch etc. cannot be construed as supply as these are the common facilities extended to all employees against their service in the employement''.
Pls advise

CA Suresh Jain

CA Suresh Jain (Expert)
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11 April 2018 Please quote section or rule in support of your understanding.

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