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Application of GST and 194C

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Manish Chakraborty

Government employee

26 Points Posted on 09 June 2023

Reimbursement of ESI to contractor for labour supply. Is ESI and PF reimbursement is taxable to GST and is 194C applicable on reimbursement of ESI PF to contractor for labour supply?

Replies (2)

Quick Summary

This discussion explores the tax implications of reimbursing contractors for Employees' State Insurance (ESI) and Provident Fund (PF) contributions related to labour supply. It questions whether such reimbursements are subject to Goods and Services Tax (GST) and if Section 194C of the Income Tax Act, concerning payments to contractors, applies. The core issue is whether these reimbursements, treated as labour costs, fall under 'any kind of payment' for tax purposes, even if not direct statutory payments.

sabyasachi mukherjee

Profession

19978 Points Posted on 11 June 2023

Reimbursement of esi to contractor for labour supply is not considered.

Manish Chakraborty

Government employee

26 Points Posted on 11 June 2023

Okay. But 194C says "Any kind of payment". Doesn't it include ESI reimbursement. Even reimbursement of ESI is not a statutory payment for us as we are not depositing the ESI to the government. But we are paying it to the contractor for smooth functioning of our job and it will be treated as labour cost us.