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

GST on employee recoveries: penalties and notice pay deductions typically not treated as consideration, so GST usually not applicable.
Recoveries from employees are taxable only if they constitute consideration for a supply; amounts characterized as penalties or compensation for breach of employment (such as notice pay deducted to discourage premature quitting) are not consideration and not subject to GST. Employee services are excluded from supply under the employment exclusion, and the tolerating act entry is taxable only when consideration exists. If no supply exists, place of supply and the IGST versus CGST/SGST question do not arise.