Place of Supply - Other employee Recovery

[KSA Associates]

Dear experts, Kindly opine your view on below case

ABC LTD having Maharashtra GST registration no. recovers amount from employees with regards to Notice pay. Some employees are outside Maharashtra as per the ABC LTD payroll record.

What will be the place of supply in case of employees who are outside India.

In nutshell, whether IGST will charge or CGST/SGST will charge?

AI Summary

Employee recoveries for notice pay and equipment damages not subject to GST per CGST Circular 178 A company with Maharashtra GST registration recovers amounts from employees for notice pay and other items like ID cards and laptop damages. The discussion centers on GST applicability and place of supply rules for employees located outside Maharashtra and India. Multiple experts conclude that notice pay recovery is not subject to GST based on CGST Circular No. 178/10/2022-GST, which clarifies such amounts are penalties rather than consideration for services. For other recoveries like equipment damages, experts argue these constitute compensation rather than taxable supply since no service is provided in return. The consensus is that employee recoveries generally fall outside GST scope as they lack the essential element of consideration for supply, making the place of supply question irrelevant.