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Employees obliged to pay GST for salaries received during the notification period: AAR

In the talent war between companies, the problem of high turnover rate is drawing attention in the corporate world. However, another important point being discussed among tax authorities and businesses is the tax treatment of salaries of employees engaged in the normal notice period.

A recent ruling in the case of the Bharat Oman refinery, a subsidiary of the state-owned Bharat Oil, stated that the GST applies to the collection of various employees by the Central Bureau of Indirect Taxation (AAR). ..

This includes phone bills paid by the company, group insurance for company employees, and salary payments during the notification period. Economic Times report. According to the GST definition, the government imposes certain taxes on activities that are considered “supply of services.” These services are either direct or indirect.

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According to the ruling, if an employee resigns from the company and serves a notice period, it is the company that serves the employee.

In a similar order passed by the Gujarat High Adjudicial Authority in July 2020, the GST authorities have issued a reservation letter issued by the applicant in accordance with the contract signed between the employer and the employee.

The order was submitted in an application by Amneal Pharmaceuticals Pvt Ltd of Ahmedabad. Authorities say applicants are obliged to pay 18% GST under the entry “Services not classified elsewhere when collecting notification payments from employees who leave the company without completing the notification period”. Said.

After careful consideration of the Gujarat State Fertilizers & Chemical Ltd (2016) case, authorities have concluded that suspension of employment should also be treated as an employment service that is not subject to service tax. We also perused the Allahabad CESTAT decisions for HCL Learning Systems Vs CCE, Noida. It was held there that if an amount was recovered from a salary already paid, such amount would not be subject to service tax (November 2019). Salary is not taxable.

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Employees obliged to pay GST for salaries received during the notification period: AAR

Source link Employees obliged to pay GST for salaries received during the notification period: AAR

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