Title: - Death compensation to employee

[SOPL SOPL]

Title: - Death compensation to employee

Dear Sir,

One of our employee met with an accident in the client work place, So client paid some amount to us we revert the same amount to employee relatives.

For this we raised Non-GST invoice to the client for Rs.,15,00,000/-

we know this issue is not liable for GST but, we didn't know the sections/references under which is not liable.

So explain the related references under which it is not liable.

Is comes under Schedule-III (not a supply) but there is no employer & ee relationship between client and us.

So pls specific relevant references under which it is not liable.

in GSTR returns, in B2B where we can consider i.e, nil rated or exempted

regards

Gowtham

[KASTURI SETHI]

(i) Compensation is not income.

(ii) It is not consideration as it does not conform to the definition of 'consideration' provided under Section 2 (31) of CGST Act. Hence .such compensation is not against taxable supply. It is not covered under Section 7 of CGST Act. (Scope of supply). It is out of scope of supply.

(iii) It is neither covered under Schedule-III nor under Schedule-II 5(e).

(iv) Compensation has been given for employee to the nearest kin. You may think the factor of 'employee' is missing but on the other hand this very amount is out of definition of supply.

Monetary compensation paid to employees is not considered supply and will not attract GST, the Central Board of Excise and Customs (C.B.E. & C.) said in clarification issued in form of Frequently Asked Questions (FAQ) dated 30.8.17 at serial no.43 under the Head/Title-LEVY. “The compensation to employees in the form of money is not a supply.

You can mention it under NON-GST Supply.

AI Summary

Monetary compensation to employees is out of scope of GST as not consideration and is a non-GST supply. Monetary compensation paid to an employee's relatives for death is not 'consideration' and therefore falls outside the scope of supply under GST; it is not covered by Schedule III or Schedule II entry 5(e) and should be treated as a non-GST supply in returns.