No GST On Allowances: Good News for Employees! Now there will be no GST on allowances
No GST on Allowances: There is an important news for permanent and contractual employees. Employees will no longer have to pay any GST on the allowances and facilities received from the employer (No GST on allowances). In this regard, the Central Board of Excise and Customs (CBIC) issued a circular clarifying that goods and services provided by employers to employees are not subject to GST. This decision has brought great relief to the employees.
The GST Council meeting was held in Chandigarh last week. CBIC has given information about the decisions taken in the meeting. Under this, the CBIC has issued a circular. As per the circular, ‘Profits provided by the employer to an employee in respect of a contract entered into between an employer and an employee shall not be subject to GST.
Such will be the effect of the decision
According to experts, this is a very good decision for the employees. This will prevent crimes related to fake challans. In addition, the burden of litigation on the courts will also be reduced. Till now, there was confusion regarding GST on benefits and allowances to the employees. For this reason, all the field officers demanded the disclosure of the matter. Accordingly, the officials sought clarification with regard to levy of GST on the facilities and allowances provided by the employer to the contractual employees. On this, the CBIC has clarified that no GST will be levied on the services provided by the employees to the company nor will the GST be levied on the facilities and allowances provided by the employer to the employees.
The facilities include things like LTA, HRA, term insurance premium, health insurance premium, employer’s school fees, company medical payments and food coupons. Though GST has not been levied on it earlier, CBIC has issued a circular clarifying this after the demand of tax authorities and industries. The employees have got a big relief from the circular of CBIC.