The upcoming GST may demand a pick over the pockets of the salaried employees as the suggestion and recent disclosure has unveiled that the goods and service tax regime may be applicable if an employee of an organization crosses its predetermined cost to company package and uses the resources of company’s assets or other personal facility being accommodated. The input tax credit will not be available in the supply of different services being provided to the employee also indulging the health and life insurance.
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The experts known to this matter said that supply of goods and services to an employee without any consideration and when done in the middle of furtherance of business organization will be taxable under the purview of goods and service tax. However, there are various exemptions in the bill of GST including that if a gift which is not crossing a value of INR 50 thousand in a financial year by the employer to the employee will not be covered under the GST regime.
The indirect tax leader of KPMG India mentioned that facilities given to an employee, which is out of his cost to company package may now attract GST. Also in the GST bill schedule II it has clearly mentioned that, if any kind of goods are kept for the purpose of business or commercial use kept in private usage, than the mentioned goods will be subjected to the goods and service tax as it will be a result of supply of the service to the employee.
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Tax partner of EY, Mr. Uday Pimprikar mentioned in a statement that, “if a company provides a car to an employee for his/her use, the usage could be considered as a supply of service to the employee, which is a taxable event for GST. Then, the company should be benefited of input tax credit and proper valuation norms must exist.” On the other hand, Sunil Gabhawalla, CA and indirect tax expert raised a question much feasible that, “The moot question is whether the provision of a certain facility is a ‘supply of goods and services’ or is it a provision of a benefit to employees arising out of an employment contractual obligation?”
