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GST on Notice Pay Recovery

11 January 2020

Is GST applicable on Notice pay recovery. (Amount recovered from employee by employer).If yes, pls share the Section no. Rule no. and SAC number.

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4 Replies

Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 11 January 2020

Yes GST is applicable.

As per para 5(e) of Schedule II , 'tolerate an act or situation" shall be treated as supply of services .
So here the employer has tolerated a breach of Contract by employee.

DEEPAK KADAM (61 Points)
Replied 12 January 2020

Thankyou Sir, Can you please provide the SAC number?

CA SANDESH MAHIPAL (Practicing in GST and MSME ) (1985 Points)
Replied 12 January 2020

As per my view, GST will not be applicable. Bcz:-
1. There is employer employee relationship.
2. There is no supply.

Lets see what other experts say.

Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 12 January 2020

@ CA SUNNY AGGARWAL

IT DOES NOT COVER UNDER EMPLOYER EMPLOYEE RELATIONSHIP ANYMORE BECAUSE HERE THE CONTRACT HAS BEEN CEASED.ITS NOT BEING IN COURSE OF OR RELATION TO EMPLOYMENT.

YES "NOTICE PAY BY EMPLOYER" IS COVER UNDER SCHDULE III HENCE GST DOES NOT ATTRACT