Central Board of Indirect Taxes and Customs (CBIC) clarified on Friday (Novmber 15) clarifies that salaries are not subject to Goods and Services Tax (GST).
It further added that no GST has been demanded on salaries paid to chief executive officers or employees.
According to the CBIC statement, reports that tax authorities want to impose GST on salaries paid to employees is factually incorrect and misrepresents tax authorities.
The CBIC statement further said that GST law position clearly states under Section 7(2) read with schedule three of the Central GST Act 2017 that salaried services by an employee to an employer will be treated neither as a supply of goods nor as a supply of services.
So salaries as such cannot be subject to GST. No notice has been issued to any company demanding GST on salaries whatsoever,” said the CBIC.
Notably, the GST is charged on prices or charges by any supplier of goods or services from consumers does comprise all costs including the cost of raw material, capital goods, input services and employee costs.
But this does not mean that salaries paid to the employees by the employer are being taxed under GST,” it said, adding that it must also be made clear that offices of an organisation in different states are regarded as distinct persons under Section 25 of CGST Act.
what is taxable under GST ?
Hence, what is taxable under GST is the supply of goods and services by the head office to its branch office and vice versa.
input tax credit
“Any tax charged on such supplies is available to the recipient as an input tax credit. This is not any additional cost to the organisation. Also, it is a worldwide practice under GST laws,” the CBIC added.
GST stands for Goods and Services Tax. Some times People called as GST Tax.
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GST was first levied by France in 1954.
GST is a destination based tax levied on the basis of the Destination principle.
GST collected on value-added at each stage of the supply chain.
GST is technically paid by suppliers but it is actually funded by consumers
Under GST, input tax credit is provided throughout the value chain for creditable acquisition.
GST is levied on supply of all goods or services or both except supply of alcoholic liquor for human consumption. Five petroleum products viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel have temporarily been kept out of GST.
Electricity has also been kept out of GST.
The structure provided under GST is dual in nature (CGST, SGST, IGST).
Under the GST regime, liability to pay tax arises when a person crosses the turnover threshold of Rs.40 lakhs
GST Composition Scheme, which is mainly devised for small taxpayers, provides concessional rate of tax and filing of quarterly returns.
Provisions of the Central Goods and Services Tax Act, relating to, (i) scope of supply; (ii) composition levy; (iii) composite supply and mixed supply; (iv) time and value of supply; (v) input tax credit; (vi) registration; (vii) tax invoice, credit and debit notes; (viii) accounts and records; (ix) returns; (x) payment of tax; (xi) tax deduction at source; (xii) collection of tax at source; (xiii) assessment; (xiv) refunds; (xv) audit; (xvi) inspection, search, seizure and arrest; (xvii) demands and recovery; (xviii) liability to pay in certain cases; (xix) advance ruling; (xx) appeals and revision; (xxi) presumption as to documents; (xxii) offences and penalties; (xxiii) job work; (xxiv) electronic commerce; (xxv) settlement of funds; (xxvi) transitional provisions; and (xxvii) miscellaneous provisions including the provisions relating to the imposition of interest and penalty.
GST Tax Rate
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Mock tests in GST
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