Question

XYZ paying rent for accommodation provided to employees and paying the repairs and maintenance charges for four wheelers owned by employees. Is XYZ liable to pay GST on it since, as per Section 15, persons shall be deemed to be `related persons` if`` such persons are employer and employee and Further, as per Section 7, supply between related persons, even if made without consideration, will be treated as ‘supply’?

Answer

XYZ (employer) is providing accommodation and repair and maintenance service to its employees.

If rent paid for accommodation is appearing as HRA and repair and maintenance of four vehicle is part of perquisites, and appearing in FORM 16 of Income tax then it is part of salary of employee and not considered as supply by virtue of clause 1 of Schedule III of CGST.
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Gifts by employees are over and above salary that are not decided at the time of employment and are not part of salary (CTC).

If the same are gift by employer then this case is covered under clause 2 of Schedule I of CGST as follows:
"Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business:

Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both."

In view of above service provided by employer to employee is covered under definition of supply even if provided without consideration and GST will be applicable. However service provided by employer to employee upto a value of Rs 50000/- in a financial year is exempt.
Thus if value of service provided (gift) by XYZ to its employees does not exceed Rs 50000/- per employee in a financial year, then it will not be considered as supply and XYZ is not liable to pay GST.

However if value of supply (gift) per employee in a financial exceeds Rs 50000/-, then XYZ is liable to pay GST on total value of service provided. (Reply dt.23/11/2018)