Services provided to employees

[Kaustubh Karandikar]

XYZ Ltd. is taking car on lease and giving to employee for his use, supplying food to employees. All this is part of the employment terms as perquisites therefore no consideration is received from the employees. Is XYZ liable to pay GST on it since employer and employee are treated as related persons?

[Guest]

Dear sir,

the perquisites which are form part of employment agreement are not liable to gst.

Because under schedule 3 the services provided by the empolyee to the empolyer are not liabe to gst.Now the perquisites{form part of empolyment agreement} which are provided by the empolyer to the empolyee is considered as salary for the services provided by the empolyee.

[Ganeshan Kalyani]

Since, the benefits forms part of the salary it is not exigible to GST.

[Ganeshan Kalyani]

However, there is a chance of applicability of GST, because schedule III of CGST, Act treats "services by an employee to the employer ....." neither as a supply of goods or services and not vice-versa.

[Ganeshan Kalyani]

Refer issue id: 114956

AI Summary

Employer-provided perquisites: usually outside GST if treated as salary, though characterization may raise GST questions. Perquisites provided by an employer to an employee as part of salary-such as a leased car or food-are generally not subject to GST because Schedule III excludes services by an employee to the employer from being treated as a supply; however, interpretive uncertainty in Schedule III leaves a theoretical possibility of GST liability depending on factual characterisation of the provision as a separate taxable supply.