Perquisite by employer to employee

GST on Perquisite by employer to employee

Goods and Services Tax (GST) doesn't apply to perquisites provided by an employer to an employee in employer-employee relationship. Perquisites are benefits or advantages given by the employer to the employee and they are often considered a part of the employment package i.e. it is part and parcel of the cost to the Company (CTC).

Circular No. 172/04/2022-GST dated 6th July, 2022 also provides clarification in this matter -

1. Schedule III to the CGST Act provides that “services by employee to the employer in the course of or in relation to his employment” will not be considered as supply of goods or services and hence GST is not applicable on services rendered by employee to employer provided they are in the course of or in relation to employment.
2. Any perquisites provided by the employer to its employees in terms of contractual agreement entered into between the employer and the employee are in lieu of the services provided by employee to the employer in relation to his employment. It follows therefrom that perquisites provided by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST when the same are provided in terms of the contract between the employer and employee.

Example : ABC Limited provides accommodation to its employees. So, this accommodation is considered part of the overall cost to the company (CTC). Hence, no GST will be chargeable.

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