Firms to not pay GST on part recovery of canteen payment from staff: AAR

Gujarat authority gives ruling in a matter involving Zydus Lifesciences; experts say greater clarity needed

Employers are exempt from paying the goods and services tax (GST) on part of money deducted from employees' salaries for payment to canteen service providers, according to the Gujarat-based authority for advance rulings (AAR).

Experts said that the Central Board of Indirect Taxes and Customs (CBIC) should come out with a clarification on the issue, as there is confusion despite the ruling.

The AAR gave the ruling after Zydus Lifesciences, which manufactures and distributes pharmaceutical products, approached the authority over this matter.

Zydus is registered under the Factories Act, 1948 and it is mandatory for it to provide canteen facilities