In the Authority for Advance Rulings decision for Faiveley Transport Rail Technologics India (P.) Ltd., presided over by SMT. T. INDIRA, MEMBER (SGST) and SMT. D. JAYAPRIYA, I.R.S., MEMBER (CGST) under Advance Ruling No. 125 (AAR) of 2023 dated December 20, 2023, critical determinations were made regarding the GST implications of various workplace services. The company, engaged in the Rolling Stock industry, sought clarity on tax liabilities and input tax credits for services provided to employees such as canteen facilities, transportation, medical insurance, and other benefits.
At a Glance: Key Rulings on GST and Workplace Services
| Service Type | GST Applicability | Input Tax Credit Eligibility |
|---|---|---|
| Canteen Services | Taxable | Available if statutory under Factories Act with over 250 employees |
| Medical Insurance | Not Taxable | Not Available (not a supply) |
| Transportation Service | Not Taxable | N/A (not a supply) |
| Car Facility | Taxable | N/A |
| Employee Well-being Expenses | Not Applicable | Not Available (not mandated under any law) |
| Gardening Expenses | N/A | Available (considered necessary for business) |
Analysis and Conclusion
The detailed rulings by the Authority for Advance Rulings illuminate the nuanced considerations businesses must navigate in determining GST liabilities and input tax credits for employee-related services. Here’s a summary of key insights:
Canteen Services are deemed a taxable supply, with the employer responsible for GST on fees collected from employees. However, input tax credit is admissible if the service is mandated by law for businesses with more than 250 employees.
Medical Insurance Policies, where premiums are passed directly to insurance providers without any profit to the employer, are not considered a supply and are thus not taxable under GST. No input tax credit is available as it is not recognized as a supply.
Transportation Services provided through third-party vendors without any profit to the employer are also not considered a supply, and thus not subject to GST.
Car Facilities, where the employer recovers the full cost from employees, are taxable as they do not qualify as non-taxable perquisites under the relevant GST schedules.
Expenses for Employee Well-being, such as vaccinations and health benefits not mandated by law, do not qualify for input tax credits as they are not obligatory under any law and are not considered supplies.
Gardening Expenses are aligned with business operations and considered essential, allowing businesses to claim input tax credits for such services.
These determinations stress the importance of understanding the specific nature and regulatory requirements of each service provided to employees in order to accurately assess GST obligations and entitlements.
