Employers will now have to pay GST ( Goods and Services Tax ) on payment of work done by employees during the notice period, taking additional premium from employees for group insurance policies and paying employees’ mobile phone bills .
New Delhi: The Authority for Advance Ruling of the Income Tax Department has said that on payment of work done by employees during the notice period, additional premium will be charged from employees for group insurance policy and payment of mobile phone bills of employees. Now the employer will have to pay GST ( Goods and Services Tax ).
What is the complete order?
According to the order, in case of notice payment, the company is actually ‘providing a service’ to an employee and hence GST should be applied on that. Under the rules of GST, GST is taxed on every activity which is treated as supply of service.
GST will also have to be paid on the notice period money
An employee has to serve a notice period of few days in the company while leaving his job. This time is taken so that the company can hire someone else in your place. Usually this notice period is about 30 days. The company also pays you for this. But according to the new rules of the Authority for Advance Ruling, the company will have to pay GST on this amount.
GST burden on policy and other bills also
According to a report in The Economic Times, apart from this, if the company has taken a group insurance policy and charges a part of its premium from its employee, then the company will also have to pay GST on that additional premium amount. Also, if the company pays the mobile bill, then GST will have to be paid on that too. Whereas GST has to be paid on mobile bill already.
Will affect the pockets of the employees
Although, according to the order of the Authority for Advance Ruling, companies will have to pay GST on these services, but it is obvious that companies mostly put the burden of such services on the employees.
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