New Delhi, Aug 14 (KNN) In-house services offered by head office of a company to its branch offices in multiple states will be treated as supply and attract goods and service tax (GST), according to an order passed by the Karnataka Bench of the Authority for Advance Rulings (AAR).

The ruling implies that companies with offices in many cities will need to raise invoices for in-house services functions and pay GST.

Salary for services such as accounting, IT, and human resource provided by the head office of a company to its branch offices in other states will attract 18% GST.

“The activities performed by the employees at the corporate office in the course of or in relation to employment such as accounting, other administrative and IT system maintenance for the units located in the other states as well i.e. distinct persons as per Section 25(4) of the Central Goods and Services Tax Act, 2017 (CGST Act) shall be treated as supply as per Entry 2 of Schedule I of the CGST Act”, the AAR said

It said the valuation of supply would include all costs, including the employee cost, provided by one distinct entity to other distinct entities.