Bonus, Leave Encashment & Reimbursement​ Query

GST is not leviable on bonus and leave encashment, since both the payments are made for services rendered by employee to employer in course of employment. Also, any other reimbursements would not be taxable under GST, if specified in the appointment letter or contract. Any payments outside the terms of contract, might attract GST, which again depends on case to case basis.

Please understand the concept of supply... For the monthly salary paid by company to its employee, the supply involved is the supply of services i.e. work done by employee during the month. Hence, services provided by employee is a supply of services. However, this service has been specifically specified in Schedule III of GST Act, stating that any service rendered by employee to employee in the course of employment is not considered as supply at all.

Now, as far as bonus and leave encashment are cocerned, the company pays these all not for any service provided by employee, but these things are paid out of respect or gratitude or so. And there is no supply at all in this case. So, no question of GST. (For instance, no one asks whether GST shall be applicable on donations paid by a company to un-registered entities??)

Regarding reimbursement of expenses, it cannot be ad-hoc said that reimbursement shall be taxable or not taxable under GST, as it needs to be analysed on case-to-case basis.