Position note on employee recoveries, canteen, transport, insurance and notice pay

On the letterhead of the firm — position note for the client’s file, to be reviewed annually and produced in an audit

Client: [Client company's name] · GSTIN: [Client company's GSTIN] · Financial year: [Financial year] · Prepared by: [Preparer's name]

1. The governing principle. Services by an employee to the employer in the course of or in relation to his employment are outside the scope of supply by paragraph 1 of Schedule III to the Central Goods and Services Tax Act 2017. Employer and employee are, however, related persons under the explanation to section 15, and by entry 2 of Schedule I a supply between related persons in the course or furtherance of business is a supply even without consideration. The reconciling principle is in paragraph 5 of Circular No. 172/04/2022-GST dated 06.07.2022: perquisites provided by the employer to the employee in terms of the contractual agreement entered into between them are in lieu of the services provided by the employee and are not subjected to GST.