Subsidized shared transport facility provided to employees in terms of employment contract is not chargeable to GST

Last updated: 22 May 2021

Save Share

Quick Summary

The Uttar Pradesh Authority for Advance Rulings (AAR) has ruled that a subsidized shared transport facility provided to employees, as per their employment contract, is not a taxable supply of service under GST. The AAR found that arranging this transport is not an activity incidental or ancillary to the core business of software development and is not essential for the business to function. Therefore, the company providing this facility does not need to charge GST on the employee's contribution.

Court :
AAR Uttar Pradesh

Brief :
The AAR Uttar Pradesh, in the matter of North Shore Technologies (P.) Ltd. [Order No. 59 of 2020 June 29, 2020] has held that, arranging the transport facility for the employees by the company engaged in business of software development is not an activity which is incidental or ancillary to the activity of software development, nor can it be called an activity done in the course or furtherance of development of software as it is not integrally connected to the business in such a way that without this, the business will not function. Therefore, subsidized shared transport facility provided to employees in terms of employment contract through third party vendors, would not be construed as 'supply of service'.

Citation :
Order No. 59 of 2020 June 29, 2020

Daily Limit Reached