Employer is liable to pay GST@18% on recovery of Notice Pay from the employees.

Last updated: 20 January 2021
Quick Summary
The Gujarat Authority for Advance Ruling has determined that employers are liable to pay 18% Goods and Services Tax (GST) on any 'notice pay' they recover from employees who fail to serve their full notice period. This recovery is considered a supply of service by the employer to the employee, thus attracting GST.

Court :
Gujrat AAR

Brief :
The applicant submitted that they are a 100% Export Oriented Unit (EOU) engaged in the manufacturing of pharmaceuticals products. They, at the time of appointing any employee at their factory situated at 882/1-871, Ground Floor, Near Hotel Karnavati, Sarkhej-Bavla Highway, Village-Rajoda Bavla, Ahmedabad-382220 (Gujarat), are entering into contract with employees by issuing “Appointment Letter”.

Citation :
ADVANCE RULING NO. GUJ/GAAR/R/51/2020

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1 Year PLAN
1999
(Excl. of GST ₹359)

BEST VALUE
2 Years PLAN
3499
(Excl. of GST ₹629)

3 Months PLAN
999
(Excl. of GST ₹179)

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