Can GST benefit Salaried People?

Can salaried person claim GST or not?

Since the introduction of GST in India during 2017, it became a massive component for taxation and related business procedures. Various employees and employer relations aren't just a part of the HR department anymore.

GST has successfully subsumed many indirect and hidden tax charges like-

1. Value Added Tax (VAT)
2. Luxury Tax
3. Octroi
4. Central Sales Tax
5. Special Additional Duty (SAD)

which were previously levied by respective states and government of India instead of Goods & Services Tax. Most people have confusion understanding whether Salary Is Non-GST Or Exempt from the system.

The GST rate slabs in India came to various segregations which included- 5%, 12%, 18%, and 28% apart from the applicable Cess. Let us learn about the changes that GST has bought in salaried person transactions and taxations.

GST On Employee Benefits

• According to research, GST would be applicable if the cash value of any gift provided to employees during the financial year crosses 50,000 rupees.
• In a C2C or Cost to Company type of organisation, GST will be legally not applicable for provisioning housing facilities for employees. Generally, it's explicitly mentioned in the Employer's Contractual Terms & Conditions.
• Many top companies give their employees the advantage of lunches or dinners at subsidised pricing or aka Corporate discount. If a caterer supplies meals to an employee directly along with an invoice slip in the company's name, GST won't be applicable. Although, authorised signatures are needed from both employee and caterer.
• Many companies majorly BPO's provide pick and drop facility to employees as a part of their conveyance, especially for individuals working night shifts. This will need a new GST regimen to be legally applicable, hence, an employee cannot claim ITC (Input Tax Credit) on cab or transportation charges.
• Some companies provide office cars or other motorised vehicles, but due to the new GST regimen, it cannot be considered as a "Supply". Any leased cars by an organisation that is provided for official or personal use are exempt from GST.
• Used or second office items like-

1. Laptops
2. Printers
3. Stationery Materials
4. Pantry Machines

all fall under the GST ambit. Office products provided by a company on FOC (Full Operational Capability) is considered a "Supply" under the GST Act of 2017.

• Many corporations provide annual health check-up programs which include several blood tests, BMI, and more. This will not be liable for any GST claim as it doesn't have any underlying "Supply" by the employer.
• Referral programs for recruitment purposes that are run by companies to gain better employees have a substantial cash profit.
• Other than these, expensive gifts, smartphones, achievement awards, RNR's, town halls, off-site parties, long service accolades, hotel accommodation for outstation visitors along with free gymming memberships provisioned by the company are all exempted out of the GST rule.

GST And Employee Reimbursements

GST will only affect the things regarding your spending like-

• EMI Rates
• Home Loan Interest Rates
• Reduced Car Prices
• Affordable Dine-In & Takeouts
• Decreased Hotel Rates
• Reduced clothing and Apparel prices
• Movie ticket prices diminished

GST On Employee Benefits

It is very important to understand employer-employee relations to moderately conclude GST impact on employer. Let us weigh the pros and cons before moving forward.

1. Freebies offered by companies come under income tax, but with GST in the swing, if gifting is done for private purposes, it will result in Supply hence reflecting a GST levy.
2. Input Tax Credit becomes null and void for employees using office facilities like- food, cabs, gyms, or insurances. The employer, on the other hand, can claim GST benefits under these circumstances.
3. Facilities, Taxes, Charges, or Provisions shall be eligible for GST if not covered under your CTC (Cost To Company). GST laws do not recognise gifts.
4. Freelancers will be liable to GST benefit by availing basic exemption of annual income or business turnover being less than 20 Lakh rupees. From earlier diminishing of taxes from 18% to 15%, freelancers need to register and file GST returns for several states every year.

IN CONCLUSION

The Goods & Services Tax does not affect your take-home salary part. Your monthly income and annual salary package will not be changed with the rules of GST.

Also read:
How to pay GST online? Step-by-Step Guide
Goods & Services Tax: The Ultimate FAQ Guide
How GST has benefited Small Businesses & Startups?

FAQ's

Q. Can Salaried Person Claim GST?

A. No, only employers can claim certain GST Benefits, read the above blog for better understanding.

Q. Is GST Benefit For Common Man?

A. Yes, most individuals who are-

1. Dealers
2. Businessmen
3. Vendors
4. Retailers

can easily benefit via GST.

Q. Can Salaried Person Benefit From GST Input Tax Credit?

A. No, ITC cannot be claimed by a salaried professional unless and until you are a dealer. If the said salaried person is also a company owner, they'll be granted the GST credit paid against the output tax liability.

Q. Is salary a non GST supply?

A. Employee salaries are not eligible for GST. However, it does not impact your final salary or payroll.

Q. Is GST levied on salary?

A. No. According to the Central Board of Indirect Taxes and Customs (CBIC), any salaries received via firms or organisations will not be subject to GST.