5% GST on Lump Sum Bonus Paid by Recipient to Canteen Service Provider’s Employees: AAR

Case Details: Authority for Advance Rulings, Telangana Foodsutra Art of Spices (P.) Ltd., In re - [2023] 150 taxmann.com 259 (AAR-TELANGANA)

Judiciary and Counsel Details

• • S.V. Kasi Visweswara Rao & Sahil Inamdar, Member

Facts of the Case

The petitioner was providing canteen services. The recipient paid a Lump Sum amount of bonus to the employees of petitioner apart from amount received under invoices for regular canteen services. It filed an application for advance ruling to determine taxability of amount paid to employees as bonus.

AAR Held

The Authority for Advance Ruling noted that all payments made in respect of a supply shall constitute as value of supply on which tax is to be levied according to rates applicable in respective notifications. In the instant case, the applicant was providing only canteen services to its recipient and didn’t provide any other ancillary or incidental services.

Therefore, it was held that the same GST rate as applicable for main service being canteen service would also be applicable for bonus reimbursement and the total amount including bonus would form value of supply of canteen services and taxable at rate of 5%.