Gst payment on canteen subsidized food provided to employee

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This query is : Resolved

malikd (Querist)

14 August 2019 Sir,

We are engaged in automobile manufacturing company. We have outdoor caterer who serves foods to our employee in company. On caterers bill we are taking input credit in our books. Nominal amount of foods are recovered from employee & shown in their salary slip.Further we are also reversing availed input credit & showing under B2C in GSTR-1.

Kindly confirm whether it is correct procedure or not and if not, what is the correct procedure to be follow .

Thanks & regards
D Malik

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

14 August 2019 Ask outdoor caterer to charge 5% GST and you charge 5% GST on cost of food supplied to employees. Claim ITC and pass on the benefit to employees.
It can be seen from the Notification that the activity of supply of food in canteens of office, factory, hospital, college, industrial unit etc. on contractual basis excepting that supply is not event based or on specific occasions, constitute supply of service in terms of amended Notification No.13/2018-Central Tax(Rate) dt.26.7.18 and is taxable at rate of 2.5% CGST + 2.5% SGST and the supplier is not eligible for the input tax credit as per the condition stipulated therein.

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