RCM ON NOTICE PAY PAYMENT BY EMPOLER TO EMLOYEE

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This query is : Resolved

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This discussion clarifies whether the Reverse Charge Mechanism (RCM) applies to notice pay given by an employer to an employee upon termination without notice. The consensus is that GST is not applicable to this payment. It's considered a 'no supply' situation under Schedule III of the GST Act, as it's pursuant to an employment agreement.

TARUN MADAN

TARUN MADAN (Querist)
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13 August 2020 DEAR SIR,
PLEASE TELL ME, IS RCM IS APPLICABLE ON NOTICE PAY PAYMENT GIVEN BY EMPLOYER TO EMPLOYEE DUE TO TERMINATE THE EMLOYEE WITHOUT ANY NOTICE.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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13 August 2020 GST not applicable on such payment made by employer.

Lekhraj sood

Lekhraj sood (Expert)
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14 August 2020 This payment is in pursuant to employment agreement and therefore, this is a case of NO SUPPLY under Schedule III and hence no GST is applicable

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