GST on certain Reimbursement to Employee and Schedule I transactions

[V Rajalakshmi]

The employer is recovering a certain amount from the employee for the following reasons

1. Telephone Exps

2. Notice Pay

3. Canteen Exps

4. Group Medi claim Exps.

Please note that in all the above cases the amount incurred by the employer is not added to the salary income of employees.

Some people are considering it as schedule 1 transactions and paying GST and Some of them are of the view that it will not fall under schedule 1 supply kindly update your views with the latest decided case law if any.

[Shilpi Jain]

Notice pay not liable - high court decision available in this regard under ST.

THE OTHERS - a view can be taken that the amount which the employer pays is only as a reimbursement to the actual supply and there is no actual supply by employer to employee.. there are a couple of advance rulings in this regard

Beamst way out could be to make them part of the CTC

[Ganeshan Kalyani]

Notice pay recovery is in connection with employment agreement where there is employer employee relationship. Gst is not applicable in such case. However, another view is that the employer tolerates an act of employee of not serving the notice period. Tolerating an act is taxable under GST. In my view GST is not applicable on notice pay recovery.

AI Summary

GST on reimbursements: employer recoveries for employee expenses generally treated as reimbursements, not taxable supplies. Recoveries by an employer from employees for telephone, canteen, group medical and notice pay are to be analysed as either reimbursements for an underlying supply or as transactions arising from the employer-employee contract; recoveries that are true reimbursements to third-party suppliers do not constitute a separate taxable supply, and notice pay recoveries are generally viewed as outside GST though an alternative view treats toleration of an act as taxable.