Benefit of employee

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This discussion clarifies whether Goods and Services Tax (GST) is applicable to interest-free loans given by employers to employees for personal use. The consensus is that GST is not applicable. This is because a loan is considered an actionable claim, explicitly excluded from GST, and there is no taxable supply as no consideration is involved. Furthermore, benefits provided by an employer to an employee in the course of employment are generally outside the scope of GST.

Rajkumar Gutti

Rajkumar Gutti (Querist)
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05 February 2025 Interest free loan given by employer to employee
For his personal consumption.

Is gst applicable to employer

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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05 February 2025 No.

Rajkumar Gutti

Rajkumar Gutti (Querist)
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06 February 2025 But sir employee is related person. In this case even though without consideration treated as supply.
What is your opinion

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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06 February 2025 GST is applicable only if there is a supply of goods or services as defined under Section 7 of the CGST Act, 2017.

A loan, by itself, is not considered a supply of goods or services because it involves the lending of money, which is considered an actionable claim and is explicitly excluded from the scope of GST (as per Schedule III of the CGST Act).
Secondly, GST is levied on the supply of goods or services for consideration, an interest-free loan does not attract GST because there is no taxable supply.
Under GST, services provided by an employer to an employee in the course of or in relation to employment are treated as neither a supply of goods nor a supply of services (as per Schedule III of the CGST Act).
Therefore, any benefit (including an interest-free loan) provided by an employer to an employee in the context of employment is outside the scope of GST.

Rajkumar Gutti

Rajkumar Gutti (Querist)
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06 February 2025 Ok, धन्यवाद सर, Thanks sir

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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06 February 2025 You are welcome.

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