Mumbai: Maharashtra bench from the GST authority for a Face Decision (AAR) has argued that the recovery of the amount of the top-up of medical insurance and the insurance premium of parents of employees is not supply and therefore not subject to goods and services (GST)).
AAR states that Tata Power, who has been looking for this decision, does not provide health insurance services to their employees or their parents and there is no insurance service supply.
Therefore, GST retribution problems did not appear.
However, it should be noted that the company has not utilized input tax credit for the GST charged by insurance companies.
In this case, the AAR bench rely on a similar verdict given in 2018 in the case of Pune Posco India’s processing center.
Lately, some AAR benches have adopted a similar holder that GST cannot be collected in the case of recovery amounts of employees for various services, such as the nominal amount restored for canteen services or even parking.
As reported by the previous Toi, the Gujarat bench from AAR has argued in the case of Tata Motors that GST will not be collected at a recovered nominal amount of employees for canteen facilities, which is transmitted by the company for third party catering.
However, it also adds that input tax credit will be blocked.
According to the non-direct Tax Specialist Sunil Gabhawalla, “the correct view is that there should be no recovery of the nominal amount received from the employee because there is no taxable supply.
If this argument does not apply, it can be said that the company acts as a pure agent and the value of ‘service’ It must be taken as zero.
“To illustrate, in terms of ion trade, a noida-based subsidiary of the British company, the bench for the authority of the appeal for the ruling of the face has argued that parking fees are collected from employees and forwarded to the authority of the building is service.
However, he continued to add that the company qualified as a pure agent.
Thus, there will be no GST retribution collected from employees.
There is no GST at the top-up cover fee of Pay Employees: AAR
