Ask Jurishour AI

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
tdb_templates
saswp_reviews
saswp-collections
saswp_rvs_location
tdc-review-email
web-story-font
web-story
googlesitekit_email
tds_locker
tds_email
saswp
mailpoet_page
mailpoet_email
tdcpt_tunes
tdc-review
pronamic_payment
pronamic_gateway
pronamic_pay_subscr
wpcode
HomeGSTPermanent Employee’s Accomodation Charges Exempt from GST, Trainee Fees Taxable: AAR

Permanent Employee’s Accomodation Charges Exempt from GST, Trainee Fees Taxable: AAR

Published on

🚀 Stay Connected With JurisHour

WhatsApp X Telegram

The Gujarat Authority for Advance Ruling (AAR) has clarified that nominal recoveries made by Suzuki Motor Gujarat Pvt. Ltd. from its permanent employees for accommodation will not attract Goods and Services Tax (GST). However, the same relief will not extend to student trainees, for whom GST will be payable.

The bench of Vishal Malani and Sushma Vora has observed that the company can claim ITC on GST paid to ASPs for accommodation services provided to employees. However, the credit will be restricted to the portion of cost borne by Suzuki itself, excluding the amounts recovered from employees. As Suzuki is charging GST on recoveries from student trainees, the AAR permitted full ITC on the GST paid to ASPs for such services.

The applicant, Suzuki Motor Gujarat Pvt. Ltd., engaged in the manufacture of passenger vehicles and parts at its Hansalpur facility, provides optional dormitory accommodation to employees and mandatory accommodation to student trainees. The company engages third-party accommodation service providers (ASPs) for this purpose, who charge GST at 18% on their services. Suzuki recovers only a nominal portion of this cost from employees and trainees.

The company approached the AAR seeking clarity on four issues in respect of GST liability on recoveries from employees; GST liability on recoveries from student trainees; eligibility to claim Input Tax Credit (ITC) on GST paid to ASPs for employee accommodation; and eligibility to claim ITC on GST paid for student trainee accommodation.

The AAR held that accommodation provided to permanent employees constitutes a perquisite under the employment contract and does not amount to “supply” under Section 7 of the CGST Act. Accordingly, GST is not leviable on the amounts recovered from employees.

Since student trainees are not employees, the dormitory facility extended to them cannot be treated as a perquisite. The AAR ruled that the service qualifies as “supply,” making GST payable on recoveries from trainees.

The company can claim ITC on GST paid to ASPs for accommodation services provided to employees. However, the credit will be restricted to the portion of cost borne by Suzuki itself, excluding the amounts recovered from employees.

As Suzuki is charging GST on recoveries from student trainees, the AAR permitted full ITC on the GST paid to ASPs for such services.

Ruling Details

Applicant’s Name: Suzuki Motor Gujarat Pvt Ltd.

Ruling Date: 12/08/2025

Read More: Bombay High Court Quashes Orders Directing GST Payment on Arbitral Award Interest and Costs

Mariya Paliwala
Mariya Paliwalahttps://www.jurishour.in/
Mariya is the Senior Editor at Juris Hour. She has 7+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started her career as a freelance tax reporter in the leading online legal news companies.

Latest articles

FREEDOM SUPREME – 2026 INSC 1195 – SRI SUJIT DAS AND ORS. ETC. VERSUS UNION OF INDIA

This Article pertaining to FREEDOM SUPREME – 2026 INSC 1195 - SRI SUJIT DAS...

GST Notice Despite Advance Ruling: Gujarat High Court Restrains Final Order Without Its Permission

The Gujarat High Court has granted ad-interim protection to a company challenging proceedings under...

GST Demand Based On Return Scrutiny Requires Prior ASMT-10 Notice: Gauhati High Court

The Gauhati High Court has set aside a GST demand proceeding involving alleged under-declaration...

Govt. Funding Doesn’t Establish Eligibility For 12% GST On Spinning Mill Construction: GSTAT

The Goods and Services Tax Appellate Tribunal (GSTAT), Pune Bench, has upheld 18% GST...

More like this

FREEDOM SUPREME – 2026 INSC 1195 – SRI SUJIT DAS AND ORS. ETC. VERSUS UNION OF INDIA

This Article pertaining to FREEDOM SUPREME – 2026 INSC 1195 - SRI SUJIT DAS...

GST Notice Despite Advance Ruling: Gujarat High Court Restrains Final Order Without Its Permission

The Gujarat High Court has granted ad-interim protection to a company challenging proceedings under...

GST Demand Based On Return Scrutiny Requires Prior ASMT-10 Notice: Gauhati High Court

The Gauhati High Court has set aside a GST demand proceeding involving alleged under-declaration...