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Can a company pay an employee both salary(192) and consultancy fees(194J) for the whole year?

21 August 2023

Can a company pay an employee both salary(192) and consultancy fees(194J) for the whole year? If yes, then what is the max take home(Salary + consultancy fees) will be there for employee to maintain, before he has to register for GST.

Does the employee is required to register for GST, if payment is made using the options below:

Total Take home 20 lakh per annum, which include (Salary: 8 lakh per annum and Consultancy: 12 lakh per annum)
Total Take home 28 lakh per annum, which include (Salary: 8 lakh per annum and Consultancy: 20 lakh per annum)
Total Take home 28 lakh per annum, which include (Salary: 7 lakh per annum and Consultancy: 21 lakh per annum)

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4 Replies

Ashuthosh M R (5 Points)
Replied 21 August 2023

In my opinion
There is no restriction placed w.r.t. payment of consultancy as well as salary to an employee. GST registration is required where the value of aggregate turnover exceeds Rs. 20 Lakhs. However services by an employee to its employer in relation to his employment is covered under schedule III and hence neither supply of goods nor supply of services.
Aggregate turnover includes all supplies made by taxable person whether on his own account or on behalf of his principal.
And hence in my opinion salary should not be considered while reckoning the aggregate turnover as it is not a supply.
In first case GST registration is not required as turnover is 12Lakhs only.
In second case registration is reqd if A.T exceeds 20 Lakhs. since it has not exceeded threshold reg not required.
in last case threshold exceeded and hence registration required.