Stipends reimbursed by Trainer Companies doesn't attract GST

Last updated: 28 August 2021

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The Maharashtra Authority of Advance Ruling (MAAR) has determined that reimbursements made by companies to an academy for stipends paid to students do not attract Goods and Services Tax (GST). The academy acts as an intermediary, processing stipend payments to trainees without making deductions. Therefore, the funds received by the academy for this purpose are not considered a taxable supply.

Court :
Maharashtra Authority of Advance Ruling (MAAR)

Brief :
In M/s. Yashaswi Academy for Skills [No. GST-ARA-83/2019-20/B-47 dated August 20, 2021], M/s. Yashaswi Academy for Skills ("the Applicant") has sought a clarification on the issue as to whether the reimbursement by the companies to the Appellant of the stipend paid to students attract Goods and Services Tax ("GST").

Citation :
No. GST-ARA-83/2019-20/B-47 dated August 20, 2021

In M/s. Yashaswi Academy for Skills [No. GST-ARA-83/2019-20/B-47 dated August 20, 2021], M/s. Yashaswi Academy for Skills ("the Applicant") has sought a clarification on the issue as to whether the reimbursement by the companies to the Appellant of the stipend paid to students attract Goods and Services Tax ("GST").

The Applicant is registered as Third-party Aggregator under the Apprentice Act 1961 which enters into agreements with various companies who impart actual practical training to the students. The Applicant, In lieu of the agreements with the industry, is engaged in preparing the Monthly attendance record of the apprentices, getting it certified from the company, processing stipends of the apprentices etc.

The Hon'ble Maharashtra Authority of Advance Ruling ("MAAR") noted that the stipend is not directly paid to the trainees by the companies but are routed through the Applicant. That the applicant only acts as an intermediary since the applicant is not allowed to make any deductions from the stipend before providing it to the trainees.

Therefore, the amount received by the applicant in the form of reimbursement does not attract any GST.

FAQ :

No, according to a ruling by the Maharashtra Authority of Advance Ruling, stipends reimbursed by companies to an academy for students do not attract GST.

M/s. Yashaswi Academy for Skills is registered as a Third-party Aggregator under the Apprentice Act 1961 and facilitates practical training for students.

The companies do not pay the stipend directly to the trainees. Instead, the payments are routed through M/s. Yashaswi Academy for Skills, which processes the stipends.

No, the academy is not permitted to make any deductions from the stipend before providing it to the trainees.

The reimbursement does not attract GST because the academy acts solely as an intermediary, processing payments without any profit margin or deduction, and the funds are not considered a taxable supply.

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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