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No GST On Perks To Employees, Clarifies Government Tax Body

Tax physique clarifies, staff wont need to pay GST on perks

Perks given by employers to staff aren’t subjected to the Goods and Services Tax (GST), the Board of Central Excise and Customs (CBIC) has clarified. 

According to a current round, providers by an worker to the employer throughout employment won’t be thought of a provide of products or providers.

That is likely one of the many clarifications the CBIC has relating to implementing the selections taken by the GST Council at its current assembly in Chandigarh final week.

“Perquisites provided by the employer to the employee in terms of contractual agreement entered into between the employer and the employee will not be subjected to GST when the same is provided in terms of the contract between the employer and employee,” the round learn.

The applicability of GST on perks had lengthy been underneath competition as earlier rulings and clarifications had set out the precept {that a} transaction between two people would nonetheless appeal to GST even when there have been no issues concerned.

The clarification issued by the federal government clearly follows the trade’s argument that GST can’t be utilized to perks as they’re regulated by the employment contract, which is protected against GST as per the Schedule III of the GST Act 2017.

Many litigations had been pending relating to the applicability of GST on perks to staff. This clarification by CBIC would pave the way in which to finish the confusion. Perks are non-cash advantages like transportation, healthcare, insurance coverage or canteen providers provided by an employer to the staff.  


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