Legally services given by employee to the employer shall not considered as supply of. This is specific exception carved out under clause 1 Schedule III of CGST Act.
This means the consideration paid by employer for providing SUCH SERVICE provided by the employee shall not be taxable. This can be Cash or even Kind as been contracted between the employer and the employee.
So even a free housing, membership of a club, subscription for health and fitness centre shall be not be taxable if provided in the course of regular employment obligation.
One may note that Employer and Employee are Related Persons as defined under the Sec 15 CGST Act.
From this point of view, over and above the contractual obligation under the employment contract, Gifts by the employer to employee upto Rs. 50,000 are exempt. The corresponding credit for such gifts shall also not be available.
Gifts like Diwali Gift, Farewell Gift may fit in this category.
The press note released by CBEC on this topic can be referred http://www.cbec.gov.in/htdocs-cb...
A thumb rule to check this one otherwise can be that the Gift shall be offered to tax by such employee and Income Tax TDS provisions are also applicable on the same.
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Rule 42 and 43 of the CGST rules are applicable for claim of input tax credit wherein the supply is being partly used for the purposes of business and partly for other purposes. In such cases, input tax credit cannot be claimed fully by the taxpayer and part of the input tax credit claim must be reversed. In this article, we look at Rules 42 and 43 of the CGST rules in detail along with procedure for reversing input tax credit claim.
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