GST on Employer giving Services to Employees – Analysis

By | May 5, 2017
(Last Updated On: May 25, 2017)

GST on Employer giving Services to Employees

As per the GST act 2017 notified by Govt of India , the Employee giving services to employer is not covered in the CGST Act 2017  as per Item No 1 of  Schedule III of CGST Act 2017 ( Activities or Transactions which shall be treated neither as a supply of goods nor a supply of Services)  i.e “ Services by an employee to the employer in the course of or in relation to his employment ”

But the Employer giving Services to employees is covered under the GST Act .Employer and Employee are treated as related person as per Explanation to Section 15 of CGST Act 2017 .

Thus even if employer provides any services to employee without consideration it will be covered under GST.

As per Item No 2 of Schedule I of CGST Act 2017 ( Activities to be treated as Supply even if made without Consideration )

2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business:

Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.

Examples of Employer giving Services to Employees on which GST may be applicable  –

  • Free /Concessional Lunch or dinner by Employer to Employees
  • Free/ Concessional car facility provided by Employer by Employee
  • Free/ Concessional House facility provided by Employer to Employee

GST Valuation Rules to apply

GST becomes applicable on  leased car provided by employer to employee and disclosed in Form 12BA as perquisite under Income Tax Act, but the valuation will not be as adopted in Rule 3 of Income-tax Rules . Valuation of Car will be as per  GST Valuation Rules [ Read Final GST Determination of Value of Supply Rules Approved by GST Council 18.05.2017 ]


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Related Book on GST Act 2017 of India

GST on Employer giving Services to Employees

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