The new Goods and Services Tax (GST) will be applicable on any non-monetary fringe benefit an employee gets from his employer, the government said. Monetary compensation paid to employees is not considered supply and will not attract GST, the Central Board of Excise and Customs (CBEC) said in the latest round of clarification issued in form of frequently asked questions (FAQ).
The monetary income will, however, continue to attract the relevant income tax. “The compensation to employees in the form of money is not a supply. However, fringe benefits are a supply of goods or services and are liable to tax if not exempted,” the CBEC said.
The fringe benefits are transactions in furtherance of business. “Even if supplied without consideration, the same are deemed supply” and will attract GST, it said. On rental income, it said GST will not be levied on the rental income of less than Rs 20 lakh in a year.
“That said, where the rental income from a single property is less than Rs 20 lakh but the aggregate rental income from various properties exceed Rs 20 lakh, the requirement for registration and GST payment will be there,” it said. According to the FAQ, no GST is chargeable if free replacement is provided by a business to customers without consideration under warranty.
Also, goods sent for a demonstration on returnable basis would not be considered supply as there is no transfer of title involved. But, if some element of service is involved, the same will be a taxable supply, it said. Equipment and instruments sent to manufacturers’ factory for repairs and calibration within India on returnable basis would mean no sale has taken place. And challan for movement of goods without supply is to be issued for such items.
On penalties levied on late or delayed payment of loans and advances, the FAQ said penal interest is a consideration for tolerating an act and it is a supply of service and will be taxable. It prescribed that GST has to be paid by a job worker on job work charges only.
Also, GST would be charged on labour charges in an invoice. Illustrating on how GST is to be levied, the FAQ said if laptop bag is supplied along with the laptop in the ordinary course of business, the principal supply is that of the laptop and the bag is an ancillary.
“Therefore, it is a composite supply and the rate of tax would be that as applicable to the laptop,” it said. Recipient of online database access services from a company abroad over the net would have to pay the applicable Integrated-GST (IGST) tax on reverse charge basis. In case the recipient is not registered, “the matter is treated as an online transaction and database access or retrieval services (OIDAR) and the OIDAR service provider is liable to take registration and pay tax,” it added.