Consideration, whether in cash or otherwise, paid to employees, termed as Cost to Company (CTC) for work done during employment, is exigible to income tax and not indirect taxes. In terms of the GST legislation, consideration paid by an employer to the employee (i.e. salary) for rendering services in the course of employment would not be liable to GST. However, the GST law does not provide clarity in cases where the employer reimburses certain expenses to its employees that are outside the purview of the employee’s CTC or recovers certain expenses for facilities provided to employees.
Tanushree Roy, Director- GST with inputs from Himanshu Arora, Nangia & Co LLP contributed an article on Tax talk: Employee contracts need to be re-worded post GST for Financial Express.