Supplies of service by the employer to the employee :
Issues: What would be the valuation where the employer recovers Rs 10 towards the supply of canteen service to the employees where the cost incurred by the employer is Rs 100?
- Supply of canteen service by the employer to its employees is considered as the supply of service and liable to GST.
- Employer and employee are related person under GST.
- Value of supply would be done based on the CGST Rules, 2017 as the transaction is between the related persons and transaction value cannot be adopted.
- Valuation in such case could be at Open market value/value of like kind and quality / 110% of the cost. Where Open market value/value of like kind and quality is not determinable due to the fact that it is practically difficult to arrive at the Open market value/value of like kind and quality on the services provided by the employer to its employees, cost + 10% would be the basis for valuation.
- Therefore, in the above example, the value of the supply would be 100 + 10% i.e Rs 110 and GST is payable at the applicable rate though only Rs 10 is recovered by the employees
