GST on recovery of Subsidized Canteen charges
This query is : Resolved
12 March 2024
Assessee provides canteen facility for around 150 Workers and 20 Staffs.
They are recovering Canteen charges from the Salary of Workers and Staffs.
Related party(Pvt Ltd) is providing the Canteen Facility.
Assessee recovers the Canteen charges from Employees and then pays the Related Party.
Whether GST is to be paid on recovery of Subsidized Canteen charges.
They are recovering Canteen charges from the Salary of Workers and Staffs.
Related party(Pvt Ltd) is providing the Canteen Facility.
Assessee recovers the Canteen charges from Employees and then pays the Related Party.
Whether GST is to be paid on recovery of Subsidized Canteen charges.
13 August 2025
GST Applicability:
Is recovery from employees a supply under GST?
When canteen charges are recovered from employees as part of salary deduction, it is considered a reimbursement or recovery by the employer.
If the employer is not charging GST separately on such recovery and it is part of salary deduction, then GST may not be applicable on recovery from employees.
Is related party providing taxable supply?
The related party running the canteen is providing catering service which is taxable under GST.
The related party should charge GST on the invoice raised to the assessee.
Assessee’s position
The assessee is not providing supply to employees, rather recovering part cost.
This recovery is not considered as a supply to employees under GST.
The assessee is not required to pay GST on this recovery from employees.
GST on payment to related party
The related party will charge GST on the canteen service provided to the assessee.
The assessee can claim ITC on GST paid to related party subject to regular ITC rules.
Is recovery from employees a supply under GST?
When canteen charges are recovered from employees as part of salary deduction, it is considered a reimbursement or recovery by the employer.
If the employer is not charging GST separately on such recovery and it is part of salary deduction, then GST may not be applicable on recovery from employees.
Is related party providing taxable supply?
The related party running the canteen is providing catering service which is taxable under GST.
The related party should charge GST on the invoice raised to the assessee.
Assessee’s position
The assessee is not providing supply to employees, rather recovering part cost.
This recovery is not considered as a supply to employees under GST.
The assessee is not required to pay GST on this recovery from employees.
GST on payment to related party
The related party will charge GST on the canteen service provided to the assessee.
The assessee can claim ITC on GST paid to related party subject to regular ITC rules.
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