GST to be levied for employees using amenities outside CTC
The GST which is likely to be rolled out from July 1, will subsume central excise, service tax and state VAT among other indirect levies on manufactured goods and services. However, the GST could be payable if an employee exceeds his or her cost to company package and avail company's asset or their personal use. Also, the input tax credit will not be available on supply of various facilities to employees, including life and health insurance.
While speaking to the experts, Supply of goods or services to an employee without consideration, when made in the course of furtherance of business, is taxable under GST. However, there is some exception in the GST bill which says that if any gift not exceeding Rs 50,000 in value in a financial year by an employer to an employee will not be treated under GST bill.
Sachin Menon, indirect tax leader at KPMG India said that amenities provided to an employee, which is not part of his or her cost to company package, could now possibly attract a GST levy, the Times of India reported.
The GST bill Schedule II states that if goods held for the purpose of the business are put to any private use, such usage would result in a supply of services and a GST levy.
Uday Pimprikar told Times of India said 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.