In an array of perplexing policies under the BJP regime, GST has turned out to be the single biggest source of confusion, cutting across sectors, products, and services. As an indirect tax, salaried employees have largely stayed away from the clutches of the GST. However, according to recent reports, upcoming changes might lead to a change in your CTC calculations at work.
In an Authority of Advance Rulings (AAR) judgment in Kerala regarding in office canteen services has triggered a new speculation on how employer-to-employee services at workplace need to be taxed. Despite the employers carrying such services without profits, the Authority ultimately ruled that as per the Section 7(1)(a) of the GST Act, 2017, such services come under outward supplies and should be brought under the ambit of GST.
While the AAR and GST Council operate separately, the GST council is set to consider this ruling with a special eye. This judgment of charging for in-house canteen services will not just increase the cost to the employer but will probably serve as a precedent for the GST council to bring other workplace reimbursements like home rentals, telephone charges, medical expenses, transportation etc under the ambit of the GST.
Whatever might be the case, everyday employees are set to lose, whether in form of reduced reimbursements at work or extra cost burdens shifted/shared with them with respect to salary restructuring. For all corporate bigwigs who offer lucrative salary packages bundled together in form of additional benefits, the next GST Council meeting will be a crucial one. Whatever the end result may be, everyday employees are set to see deeper holes in their pockets.