Tax authority clarified, employees will not have to pay GST for privileges
The Central Board of Taxation and Customs (CBIC) has clarified what privileges employers give employees that are not subject to Goods and Services Tax (GST).
According to a recent circular, workers’ services to employers during employment will not be considered as the provision of goods or services.
That is one of many clarifications that CBIC has regarding the implementation of decisions taken by the GST Council at its recent meeting in Chandigarh last week.
“Conditions provided by the employer to the employee under the contractual agreement entered into between the employer and the employee shall not be subject to GST when the same provision is provided for in the contract. contract between the employer and the employee”, the circular reads.
The applicability of GST to privileges has long been contested as previous rulings and clarifications have established the principle that a transaction between two individuals will still attract GST even without GST. any relevant considerations.
The government-issued clarification clearly follows the industry argument that GST cannot be applied to privileges because they are covered by employment contracts, which are protected from GST under Annex III of the Act GST law 2017.
Many lawsuits are pending regarding the application of GST to employee privileges. This clarification by CBIC will pave the way to end the confusion. Perks are non-cash benefits such as transportation, health care, insurance or canteen services provided to employees by an employer.
