18% GST Payable On The Commission If Commission Is Deducted On The Bonus Amount As An Intermediary: AAR

The Telangana Authority of Advance Ruling (AAR) has ruled that 18% of the commission will be deducted from the bonus amount as an intermediary.

The bench of Kasi Visweswara Rao and Sahil Inamdar has observed that 5% GST is payable on the rest of the amount, which is arrived at after excluding the commission from the entire bonus, as it would be included as the value of supply of canteen services in accordance with Section 15(2) of the CGST Act, 2017.

The applicant is providing canteen services to ITC Limited. The applicant has been issuing invoices for their regular canteen services at a rate of 5%. The applicant had also received a lump sum amount of bonus for paying their employees from their service recipient, for which they are charging 18% GST. But the service recipient is not ready to accept the invoice charging 18% GST.

The applicant sought an advance ruling in respect of the issue of the GST rate applicable on reimbursement of bonuses.

The AAR held that the consideration received by the applicant as the value of supply, including the amounts received in the name of a bonus, will be chargeable to tax at the rate of 5% GST.

Applicant’s Name: M/s. Foodsutra Art Of Spices Private Limited

Date: 12-04-2023

Click Here To Read The Ruling