AARs give divergent rulings on notice pay recovery by employers

 









If a company is in Maharashtra, it need not pay goods and service tax (GST) on the money recovered from employees who leave without serving the notice period. But that may not be the case in Madhya Pradesh.

Syngenta India Limited, a company engaged in the manufacturing of pesticides and various types of seeds, recovers money from employees if they leave the job without serving the complete notice period.


The company offers various incentives to its employees as a part of the employment policy like a group insurance policy, parental insurance policy. For the same, it recovers the amount from employees.

The company approached Maharashtra authority for advance ruling (AAR) on whether GST would be applicable on the amount recovered from employees by way of parental insurance and notice pay recovery.

The AAR ordered that GST would not be leviable on these kinds of recoveries.

Earlier, in a matter related Bharat Oman Refineries Ltd, Madhya Pradesh AAR held that “relieving an employee without notice period or by accepting a shorter notice period” is a supply of service and hence GST is applicable on payment of notice pay by an employee to the employer.

It had also held that the money received from employees for medical insurance to non-dependent parents would draw GST.

Sandeep Sehgal, Partner-Tax, AKM Global, said the issue of GST on notice pay recovery is becoming a vexed issue due to divergent rulings.

"The definition of service under the GST laws is a very wide one and the fact that services provided to employees is considered a deemed supply has further exacerbated the issue. The GST Council should look into the issue in the next council meeting and should clarify the intent, which can be incorporated into the statute,” he said.


Source:https://www.business-standard.com/article/current-affairs/aars-give-divergent-rulings-on-notice-pay-recovery-by-employers-122012701643_1.html


Download our App to get knowledge updates: https://play.google.com/store/apps/details?id=com.app.gstmitra



Join Our Telegram Channel for more updates:https://t.me/praveengst





























Comments

Post a Comment

Popular posts from this blog

Centre appeals against ruling on levy of GST on maintenance charges to resident welfare associations

Image
  The Centre has preferred a writ appeal before the Madras High Court against a single judge's order that flat or villa owners paying more than ₹7,500 a month towards maintenance charges to their residents’ welfare associations must pay Goods and Services Tax (GST) at the rate of 18% only for the amount exceeding ₹7,500 and not for the entire monthly contribution. Justices T.S. Sivagnanam and Sathi Kumar Sukumara Kurup on Wednesday allowed an application filed by the Centre to dispense with production of a certified copy of the judgment passed by Justice Anita Sumanth recently and directed the Registry to list the appeal for admission in the usual course. Justice Sumanth had in July this year quashed an order passed by the Authority for Advance Ruling (AAR) on June 21, 2019 as well as a consequent circular issued by the Department of Revenue under the Union Finance Ministry on July 22, 2019 since both of them had insisted upon collecting GST for entire monthly contribution. The jud...
Read more

Seven key things to know before filing income tax return (ITR) for FY21

Image
  The last date to file income tax return for the financial year 2020-21 has been extended to September 30, 2021. Although there is more than two months left for the deadline to end, it is always recommended to complete the task as soon as possible and not to wait for the last minute. Worth mentioning here is that the income tax department last month launched a new e-filing portal (www.incometax.gov.in) to speed up the processing of tax returns. The I-T department will soon launch a mobile application, having all the features of the new portal. This year taxpayers have to take care of the following changes in the ITR filing process. 1) A new utility named JSON has been launched for filing tax return forms for FY21. At present, only three forms, ITR 1, 2 and 4 have been released. These new forms will import pre-fill data such as personal details, salary income, dividend income, interest income, capital gains and all the information available in Form 26AS. 2) Taxpayers will have the ...
Read more

Income Tax Dept detects ₹350 cr unaccounted cash receipts after raid in Rajkot

Image
  The Income Tax Department carried out a search and seizure operation on a real estate group based in Gujarat's Rajkot and found unaccounted cash receipts in various projects of approximately ₹350 crore, the Finance Ministry said on Friday. The group is among Gujarat’s prominent real estate builders and developers and is actively engaged in real estate, construction and land trading businesses in and around Rajkot. More than 40 premises were covered in the search operation. During the course of operation, many incriminating documents and digital evidences were seized indicating involvement of the group in unaccounted transactions. The IT sleuths found substantial evidence of transactions outside the regular books of accounts, unaccounted cash expenses, cash advances received and interest paid in cash. Evidence of on-money payments in real estate projects-flats, shops and land deals has also been found. Total unaccounted cash receipts in various projects of approximately ₹350 crore...
Read more