GST: Cross-Charge Issue Just Got Real

Jun 6, 2022

If the goods and services tax department has its way, branch offices should be paying their head offices for employee costs. Since every branch office has a separate GST registration, making it a ‘distinct person’, such supply of service by the head office to distinct units is liable to be taxed as per CGST rules. Unlike the service tax regime, the GST requires every branch office to obtain a registration, making it a ‘distinct person’. According to the central GST law, if expenses are incurred by a distinct person for the benefit of another distinct person, the activity will be viewed as “supply of services or goods” liable to GST.

Against this backdrop, Ritesh Kanodia, Partner, Economic Laws Practice (ELP) has been quoted by BQ Prime for their article titled ‘GST: Cross-Charge Issue Just Got Real’. Ritesh is of the opinion that how can one tax the service of his own employee, working out of the head office to the branch when the GST can’t be levied on employer-employee relationship, which is a contract between the company as a legal entity and the employee.

Read the comment and detailed article here: