Tamil Nadu AAR Confirms GST on Non-Monetary Benefits Earned by Paint Dealer
The current applicant has been filed by a company, Karthik and Co., before the Authority for Advance Ruling (AAR), Tamil Nadu No. 207, 2nd Floor, Papjm Building, No. 1, Greams Road, Chennai 600 006. The applicant is registered under the act of GST Act, having GSTIN 33AAGFK0960K1ZD, and is located at No. 133, Dharapuram Road, Tiruppur – 641 604.
The applicant is engaged in a wholesale and retail business. It is a dealer of paints and related products and obtained a franchise from the principal, who is a paint manufacturer. Basically, a franchise is an official permission taken by a wholesaler or retailer to sell its company’s goods or services in a particular area. The business of the company is giving it some non-monetary benefits in the form of free gifts, compliments, and tour packages for them as well as their customers who bought their products, i.e., paints and related products.
Generally, these products are bought by painters. For this non-monetary benefit, the company has deducted TDS under Section 194R of the Income Tax Act. Hence, the applicant has raised a tax invoice for the value and charges CGST and SGST. However, as per the paint manufacturers, the applicant is not entitled to raise any tax invoice if benefits received are non-monetary in nature, and these are also not considered “supply” under the GST Act. Now, the applicant is confused and hence sought the present advance ruling.
Question Asked by Tamil Nadu AAR
Seeking the current Tamil Nadu Advance Ruling (No. 46/ARA/2025), dated November 17, 2025, the applicant has asked the following questions related to its business:
“Question 1: Whether the TAX INVOICE raised by us for the non-monetary benefits/perquisites received is valid under the GST Act?
Question 2: Whether the value on which TDS is deducted under section 194R of the Income Tax Act should be considered as SUPPLY?
Question 3: If the same term is used as SUPPLY, then let us know whether it is being construed as supply through any notification or under any section of the GST Act.”
Answer Given by Tamil Nadu AAR
Here is the answer given by the Authority for Advance Ruling (AAR), Tamil Nadu, to the question asked by the applicant:
Answer 1: Advance ruling rules that the tax invoice raised by the applicant for the value and charges of CGST and SGST in relation to the non-monetary benefit received by it is valid under the act of GST, as the said benefit is ‘consideration’ for the service rendered as discussed in the paras supra.
Answer 2: The money the applicant receives is for providing support services. Since TDS has been deducted under Section 194R, it means the value of the gifts, benefits, or tour packages given to the applicant is treated as their income for the service they provided. Therefore, these items are also counted as a supply under GST.
Answer 3: As per the authority for advance ruling, transactions held between the applicant and the manufacturer fall within the definition and scope of supply defined under Section 7 of the Act, as mentioned in the paras supra.
Citation: Karthik and Co. (AAR Tamil nadu); Advance Ruling No.46/ARA/2025; 17/11/2025
