GST impact on employees: How employer, staff relationship has got complicated

The GST laws have tried to deal with many ambiguities that prevailed beneath earlier tax laws resulting in supererogatory proceeding.

The Goods and Services Tax (GST) laws have tried to deal with many ambiguities that prevailed beneath earlier tax laws resulting in supererogatory proceeding. One such provision that has been confined down otherwise in GST is services flowing from leader to the worker. Overall, GST is being seen as a awfully positive move by the govt. However, at identical time, the new GST rules might sway be a moistener for the link between the leader and also the worker.

Supply of products from leader to worker

The introduction of GST on the availability of products and services flowing from the leader to the worker, aside from gifts not surpassing Rs 50,000 in price, might compel employers to require a contemporary cross-check the structure of worker remuneration and advantages outside the wage contract. The GST law clearly states that GST would be collectable if there's a provide of free product or services to associate worker surpassing the add of Rs 50,000, conjointly if associate worker avails the assets of the corporate for private use, it'd trigger GST.

Tax on services by employers

Employers typically offer sure facilities like eating house, company vehicle, leave travel, gym, club membership, etc., freed from charge and in composition these provides, employers aren't allowable to avail input reduction. transportation in liabilities on such provide of products and services while not the power of input reduction is essentially unfair and goes against basic VAT principles. GST inter-alia as a replacement “employee tax”, albeit not on pay and wages however on the non-salary receipts of products and services from employers might force the latter to scale back the worth of such facilities or recover the tax price from the workers. If the GST is recovered from workers, the govt might cushion the tax blow by allowing GST rebate within the computation of revenue enhancement liability of such workers.

Reworking pay packages

Another issue is that the term “gift” has not been outlined in GST. the sole relief during this regard is that input reduction won't be denied in cases of services to be notified by the govt, these are wherever the leader is supposed beneath any law to produce identical to its workers.

The question that continues to be unrequited is whether or not provision of a precise facility like share cab used for dropping {the workers back home or lunch provided at subsidized rate within the eating house or occasional provided throughout workplace hours may be a ‘supply of products associated services’ or is it a provision of a profit to employees arising out of an employment written agreement obligation. Provision of those advantages area unit obligations of the leader arising out of the utilization arrangement, these ought to stay out of the reach of GST. However, Indian employers would have to be compelled to take care whereas drawing up Counterterrorist Center packages of its workers to incorporate advantages that area unit concomitant employment.