Reverse Charge

[Kaustubh Karandikar]

MR. XYZ is on the pay roll of PQR Ltd. (India). He has been deputed to work in Singapore and his salary is transferred from Indian Bank of PQR to the Singapore bank of XYZ and gets converted in to US$ in XYZ’s bank account in Singapore. Is PQR liable to pay GST on it under reverse charge?

[Rajagopalan Ranganathan]

Sir,

If the relationship between XYZ and PQR Ltd is relationship between employer and employee then according to Sl. No.1 of Schedule III of CGST Act, 2017 then such ACTIVITIES OR TRANSACTIONS SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES and hence no gst is payable.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Rajagopalan sir

[Bhavika Chothani]

GST is applicable only in case of supply of goods or services. Here the relationship between Mr. XYZ and PQR Ltd is of employee-employer, hence as per GST law this is neither a service nor goods are supplied. So GST will not be payable in this case

AI Summary

Employer-employee payments not subject to GST as they are not a supply under GST law.
Payments of salary by an employer to an employee deputed abroad are excluded from GST because the employer-employee relationship is treated under Schedule III as neither a supply of goods nor a supply of services; consequently, such salary remittances do not attract GST or reverse charge liability.