Dear Sir,
If employee has taken car rental service from unregister dealer and after that he has claim to voucher to company.
Then company has to pay GST under RCM @ 5%
Reverse Charge on Employee Reimbursement
As per relevant provisions of section 9 (4) of the CGST Act, 2017 :
“The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to
such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.”
Plain reading of above provisions clarifies that when there is supply from unregistered dealer to a registered dealer, it is the liability of registered dealer to pay GST under reverse charge mechanism.
Hence, when an employee incurs expenses on behalf of the employer than the employee is simply acting as an agent of the employer and hence on the basis of section 2(93) of the CGST Act, 2017 the employer i.e. the principal would be considered as the
‘recipient’.
Thus when employee has incurred any expense on behalf of the employer, the recipient of the service would be the employer. Further, if such services are received from any unregistered dealer, the employer would be liable to pay GST under reverse charge mechanism on such transaction.
Regards,
Vikas Kondalkar
Mob no. 9930986848
Email id – vikas_kondalkar@yahoo.com