The Haryana Authority of Advance Ruling (AAR) has said that free transport provided by an employer to ferry employees to work is subject to goods and services tax (GST), adding a fresh twist to an issue where some other states have taken a different position.
The move also has implications for several employees who depend on office buses to ferry them from home or from the Metro stations in Gurugram and other locations. Following the ruling, an employer can choose to pass on the burden to employees or absorb it.
Gurugram-based Beumer India had approached the Haryana AAR, seeking a view on whether the free transport provided to its employees was subject to GST as no consideration was involved. In addition, it wanted clarity on whether the charging for AC transport facilities would attract a levy. It had hired buses for its employees and argued that this was provided in course of employment and should not be construed as provision of a service.
The company had cited rulings by the Maharashtra and Uttar Pradesh AARs related to health insurance, which held GST should be levied on amount recovered from employees.
But the Haryana AAR contended that the transport facility fell under the purview of “consideration”. It also pointed out that employees who were not availing of the facility were paid an allowance under the company’s car lease policy. Tax practitioners have often complained of multiple rulings from states creating confusion over the principles of GST, which was introduced a little over three years ago.
It may be noted here that Maharashtra Authority of Advance Ruling (AAR) in the case of Tata Motors had ruled that GST not is applicable on nominal amount recovered by Applicants from employees for usage of employee bus transportation facility in non-air conditioned bus. For details click here.
Source : timesofindia.com
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
