16 March 2018
Hi experts. X company raised the bill as follows Services RS .10000 /- IGST Rs. 1800 /- Incentive Rs. 2000 /- Total payable 13800 /- . My question is that, should we need to tax on Incentives or not? and if yes , while filing GSTR-1 , what will be the invoice value ... Rs. 11800 /- OR 13800 /-
16 March 2018
A Firm is in Employee Recruitment services. For every employee recruited by the firm to the company they will raise bill as above according to contract made with the firm and company.
My question is that 1. whether the firm should charge GST on incentive also ? and if yes , while filing GSTR-1 , what will be the invoice value ... Rs. 11800 /- OR 13800 /-
31 July 2024
For a firm providing employee recruitment services, the treatment of GST on incentives and the invoice value depends on the nature of the charges and the applicable GST rules. Here’s a detailed explanation:
### **1. GST on Incentives**
**1.1. ** **Nature of Incentives:** - **Incentive as a Separate Charge:** If the incentive is a separate payment made for recruitment services and is not part of the primary service charge, then it is generally treated as a separate supply. GST would be applicable on this amount as well.
- **Bundled Charges:** If the incentive is included in the overall service fee or part of the service agreement, it may be included in the total value of the service for which GST is charged.
**1.2. ** **GST Applicability:** - **Recruitment Services:** Employee recruitment services are classified under “Business Support Services” and are subject to GST. The applicable rate is typically 18%.
- **Incentives:** If the incentive is considered as a part of the overall service fee or if it is separately billed, GST at the rate of 18% would apply to the incentive amount as well.
### **2. Invoice Value in GSTR-1**
**2.1. ** **Invoice Value Calculation:** - **GST Inclusive or Exclusive:** You need to determine whether the invoice value is inclusive or exclusive of GST. Typically, the invoice value should be exclusive of GST, and GST should be added separately.
- **Example Calculation:** - **Base Charge:** Rs. 10,000 - **Incentive:** Rs. 2,000 - **Total before GST:** Rs. 12,000 - **GST (18% on Rs. 12,000):** Rs. 2,160 - **Total Invoice Value (Inclusive of GST):** Rs. 14,160
**2.2. ** **Reporting in GSTR-1:** - **Inclusive of GST:** If the invoice value of Rs. 11,800 includes GST, then you should report it as such in GSTR-1, and the GST component should be separately mentioned.
- **Example:** If Rs. 11,800 includes GST, the base value would be Rs. 10,000, and GST at 18% would be Rs. 1,800. You report Rs. 10,000 as the value of supply and Rs. 1,800 as the GST component in GSTR-1.
- **Exclusive of GST:** If Rs. 11,800 is exclusive of GST, then the GST should be added to this amount to get the total invoice value.
- **Example:** If Rs. 11,800 is exclusive of GST, you need to calculate GST (18% of Rs. 11,800 = Rs. 2,124) and report Rs. 11,800 as the base value of supply and Rs. 2,124 as the GST component. The total invoice value would be Rs. 13,924.
### **Summary**
1. **GST on Incentives:** Yes, GST should be charged on the incentive amount if it is considered a separate charge or part of the total service fee. The rate of GST is generally 18%.
2. **Invoice Value Reporting:** - **If Inclusive of GST:** Report the value excluding GST and separately show the GST component in GSTR-1. - **If Exclusive of GST:** Report the base value of supply and GST separately in GSTR-1, and the total invoice value will be the sum of the base value and GST.
### **Action Steps**
1. **Determine whether the incentive is included in the total service charge or billed separately.** 2. **Calculate the GST based on whether the invoice value is inclusive or exclusive of GST.** 3. **Accurately report the values and GST in GSTR-1 according to your findings.**
If there’s any ambiguity or specific contractual nuances, it might be beneficial to consult with a tax advisor or GST consultant to ensure accurate compliance with GST regulations.
CAclubindia
