Services supplied to employees

[Kaustubh Karandikar]

XYZ Pvt. Ltd. is owning motor cars and the same are used by the employees for their personal as well as for official use. Is XYZ required to pay GST on it towards service provided to employees?

[Amit Agrawal]

Any perquisites provided by the employer to its employees in terms of contractual agreement entered into between the employer and the employee are in lieu of the services provided by employee to the employer in relation to his employment and same is not subject to GST.

Kindly refer to Serial No. 5 of Circular No. 172/04/2022-GST dated the 6th July, 2022.

These are ex facie views of mine, the same should not be construed as professional advice / suggestion.

[Padmanathan KV]

Agree with Ld. Amit Ji. Primarily, it will depend upon the terms of the employment contract and perquisites will be covered under Sch III. Apart from the circular quoted, pls refer to Tata Motors AAR and few other AARs subsequent holding that bus facility provided to employee even at concessional rate is not supply.

[Shilpi Jain]

These cars maybe given to them as part of the company policy being part of their CTC. It considering that the company has paid GST on purchase of the car (which it is not eligible to take credit), in light of the clarification given by the CBIC, this should not be liable to GST.

AI Summary

Perquisite treatment of employer provided vehicles is not a taxable supply, subject to employment contract and schedule exclusion. Characterisation of employer provided cars as perquisites forming part of contractual remuneration determines GST incidence: if furnished as part of employment terms and covered by Schedule III exclusion, such provision is not a taxable supply, a position supported by administrative circulars and advance ruling precedents; attention must be paid to company policy, contractual terms and input tax credit treatment on acquisition.