Earlier this week, a financial daily had reported that companies may have to restructure the reimbursement component of their employee’s salary to ensure that it doesn’t attract GST.
It was just a rumour. If you had begun to worry your office reimbursements on your mobile bill, home rentals, uniforms and other such sundry items would not come under the GST net, you needn’t anymore.
All reimbursements will continue to be outside the ambit of the Goods and Services Tax, a senior finance ministry official said today. The general public, driven by media reports, was led to believe that these reimbursements would now be taxed. Such reimbursements can often account for as much as 30 to 40 percent of an employee’s salary.
“If reimbursement is part of the contract (with the employer), then GST (Goods and Services Tax) will not be levied,” the official explained.
Earlier this week, a financial daily had reported that companies may have to restructure the reimbursement component of their employee’s salary to ensure that it doesn’t attract GST.“Reimbursements on home rentals, telephone charges beyond a certain limit, medical premiums for extra coverage, health check-ups, transportation, gym use, uniforms or even re-issue of identity cards could face GST,” The Economic Times had reported, adding that tax experts have started advising companies to ask HR departments to examine these issues closely, owing to the recent decision by the Authority for Advance Rulings in a case concerning canteen charges.