Leaving your job without serving the stipulated notice period will now cost employees 18 percent goods and services (GST) tax on the pay recovered for the notice period duration.
The Gujarat Authority of Advance Ruling has held that an employee exiting a company without completing their notice period would be liable to pay 18 percent GST on recovery of the pay.
The Authority was hearing a case where an employee of Ahmedabad-based export company Amneal Pharmaceuticals sought advance ruling on the issue of exit from their job without serving the three month notice period.
“We hold that the applicant is liable to pay GST at 18 percent under the entry of services not elsewhere classified, on recovery of notice pay from the employees who are leaving the company without completing the notice period as specified in the appointment letter issued as per the contract entered between them,” the authority said in an order.
Terming it as “tolerating an act”, the Authority said that recovery of the amount would be in lieu of “breach in serving stipulated notice period.”
Further, the amount will not be covered under employee exemptions as per the GST Act, it added.