GST ON REIMBURSEMENT OF employees taken on contracr

In my view, GST cannot be restricted to service charge merely by splitting the invoice. Salary/wage reimbursement will be excluded from taxable value only if the contractor satisfies the pure-agent conditions under Rule 33 of the CGST Rules.

If the employees are on contractor payroll and the contractor is supplying manpower/payroll service, then the reimbursement of salary/wages generally forms part of the value of supply and GST is chargeable on the total amount recovered from the club. Section 15 supports inclusion of amounts charged in connection with the supply.

GST only on service charge can be considered where the contractor is contractually appointed as a pure agent, makes payment on behalf of the club, recovers only actual amount, separately indicates the reimbursement in invoice, and the salary cost is not part of his own supply value. Mere invoice bifurcation will not be sufficient.

Therefore, the agreement, employment records, payroll structure, PF/ESI records, invoices and actual control/payment flow must be examined before taking a position.