CBIC clarifies Various Issues w.r.t Refund on Deemed Exports, Perquisites and Utilization of Balance in Electronic Cash/ Credit Ledgers

The Central Board of Indirect Taxes & Custom (CBIC) vide Circular No. 172/04/2022-GST dated 06th July 2022 clarifies Various Issues w.r.t Refund on Deemed Exports, Perquisites and Utilization of Balance in Electronic Cash/ Credit Ledgers.

The Circular discusses a number of topics, such as the refund requests made by recipients of supplies that are deemed to be exported, the interpretation of section 17(5) of the CGST Act, benefits provided by employers to employees in accordance with written agreements, and the use of funds found in the electronic credit ledger and electronic cash ledger for the payment of taxes and other obligations.

Further clarification was provided, stating that the proviso following sub-clause (iii) of clause (b) of sub-section (5) of section 17 of the CGST Act applies to the entirety of that section as well.

Furthermore, the term “lease” as used in clause (b) of sub-section (5) of section 17 exclusively relates to the leasing of automobiles, ships, and aeroplanes, not the leasing of any other goods. As a result, the use of ITC is not prohibited under sub-paragraph I of clause (b) of sub-section (5) of section 17 of the CGST Act when leasing anything other than cars, boats, and aeroplanes.

The Board has made it clear that any perquisites offered to employees by their employers under the provisions of a contract they have signed are in lieu of any services the employee would have rendered to the employer throughout the course of his employment. It follows that benefits/ perquisites provided by the employer to the employee pursuant to a contract between the employer and the employee will not be subject to GST when said benefits are provided pursuant to the said contract.

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