IMPACT OF GST ON EMPLOYER EMPLOYEE TRANSACTIONS
By Team Legistify / 2017-07-11

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ALMOST 10 days after the historic tax reform goods and services tax (GST) was launched on July 1, clarity has started emerging on tax incidence with regards to salary benefits offered by employers to their staff.

Most of the benefits provided by employers to their staff such as health checkup facilities, mediclaim, mobile handsets would not attract GST keeping tax liability in the new indirect tax regime almost same compared to the previous structure.

A clutch of benefits as part of the offer letter such as cash allowance given to staff on successful reference, house lease, long service awards, employee welfare schemes including an off-site/town hall and free gym would be out of GST net.

The employers would, however, be liable to pay GST on gifts exceeding Rs50,000 in value. For this purpose, the companies would have to keep the record of all the tangible monetary benefits to calculate annual tax outgo on this account.

In a study on employeremployee transactions in the new indirect tax regime, top consultancy firm PricewaterhouseCoopers (PwC) has said that GST would be payable in cash value of gifts provided to an employee during a financial year exceeds Rs 50,000 and principles of open market value would apply.

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