Taxability of Employee and Employer Services/Goods under GST: Explained

As per the Goods and Services Tax (GST) laws, any individual or entity providing taxable services or supplying goods is required to pay GST. This includes both employees and employers. In this article, we will discuss the taxability of employee and employer services/goods under GST.

Employee Services/Goods

Employees may provide services or goods to their employers, which can be taxable under GST. In such cases, the value of the services or goods will be determined based on the open market value of the same or similar goods or services.

For example, if an employee provides a service to their employer that would ordinarily be provided by a third-party service provider, the value of the service would be determined based on the open market value of the same or similar services.

It is important to note that GST is only applicable to services or goods provided by an employee to their employer if the same is provided in the course or furtherance of employment. If the services or goods are provided outside of employment, they will not be taxable under GST.

Employer Services/Goods

Employers may also provide services or goods to their employees, which can be taxable under GST. In such cases, the value of the services or goods will be determined based on the open market value of the same or similar goods or services.

For example, if an employer provides a service to their employee that would ordinarily be provided by a third-party service provider, the value of the service would be determined based on the open market value of the same or similar services.

It is important to note that GST is only applicable to services or goods provided by an employer to their employees if the same is provided in the course or furtherance of employment. If the services or goods are provided outside of employment, they will not be taxable under GST.

Input Tax Credit (ITC)

Under GST laws, an entity can claim Input Tax Credit (ITC) for GST paid on goods or services used or intended to be used in the course or furtherance of business. This includes ITC on services or goods provided by employees or employers.

However, it is important to note that ITC can only be claimed if the services or goods are used for business purposes. If the same is used for personal purposes, ITC cannot be claimed.

Conclusion

In conclusion, both employees and employers may provide taxable services or supply goods under GST. The value of the same will be determined based on the open market value of the same or similar services or goods. ITC can be claimed for GST paid on such services or goods if the same is used for business purposes. It is important to keep these factors in mind while dealing with employee and employer services/goods under GST.