An employer-employee relationship is something which is no longer the sole purview of the HR department. Under GST, which is set to be introduced from July 1 the taxman could also be probing into various facets of it. GST would be payable if there is a supply of free goods or services to an employee exceeding the stipulated sum, if an employee avails of a company asset for personal use (say, a car), it would trigger GST.
Also, input tax credit will not be available on the supply of various facilities to employees, including life and health insurance. Supply made without consideration (to employees):
A supply made without consideration (to employees):
The taxable event under GST is the supply of goods and services. Supply of goods or services to a related party (a term that includes employees) without consideration, when made in the course of furtherance of business, is taxable under GST.
An exception has been carved out in the GST Bill. Schedule 1 provides that `gifts’ not exceeding Rs 50,000 in value in a financial year by an employer to an employee shall not be treated as supply of goods and services.
Further The term gift has not been defined in the GST bills. Going by its dictionary meaning, a gift is something voluntary supplied without any consideration.