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Office amenities like free meal, pick and drop to attract GST: Report

A media report today claimed that the government may bring free goods and services provided to employees by an employer under the ambit on the new tax regime.
India TV Business Desk New Delhi March 29, 2017 17:16 IST
India TV Business Desk

The government’s ambitious plan to subsume a set of taxes into a single nationwide tax has been known, until now, for its ability to stall Parliament and stir opposition. 

However, the contours of the tax reform and its possible impact it will have on the common man are now getting clearer as the target date of the rollout of the Goods and Services Tax (GST) draws close.  

A media report today claimed that the government may bring free goods and services provided to employees by an employer under the ambit on the new tax regime.

According to a report in the Times of India, supply of free goods or services to an employee by an employer exceeding the stipulated amount will be treated as supply of goods that will be taxed.

At present, several companies offer free amenities to their staff like free meal, pick-up and drops etc. Once the new tax regime replaces the host of central and state taxes, some company perks may be dwindled.

Also, anything which is not part of the CTC including the health insurance, can attract the new levy, it said, adding that gifts by the company to its employees exceed Rs 50,000 in value, will be taxed. 

The development has evoked a mixed response from experts. While some feel that amenities provided to an employee, which is not part of CTC, could now possibly attract a GST levy, others felt that pick and drop services and meals should be out of the GST purview.

"The moot question is whether provision of a certain facility is a `supply of goods and services' or is it a provision of a benefit to employees arising out of an employment contractual obligation?" Sunil Menon, indirect tax leader at KPMG India, said.

The GST, the biggest tax reform since independence, provides single registration to manufacturers and suppliers of goods and services to self-assessment of tax.

The government has proposed to launch GST from July 1. It is estimated that the rolling out of the GST can add up to 2 per cent to India's economic growth.