Executor
Start Up Consultant
Atoolsingh
Dgm - Human Resources
+1 Other

Dear All
I would like to know what is the current standard practise adopted in you Orgn in term of applicability of Service Tax on Notice Pay recovery
as per the point given below :
1) Incase there is a recovery from the employee Rs 20000/-.
a) Will the recovery from the employee will be Rs 20000/- + Service Tax or
b) Will the recovery from the employee be Rs 20000/- only
Incase it is b) who will bear the tax ?
2) Incase it is termination or ask to go case and Org has to pay the notice Rs 20000/-
a) Will the payment to the employee will be Rs 20000/- + Service Tax or
b) Will the payment to the employee will be Rs 20000/- only
Incase it is b) who will bear the tax ?
Kindly forward your views this is critical considering the apprehension that employee may fight back that the same was not mentioned in Appt letter !!!
Regard
Atul Singh
10th January 2014
Why would Service Tax be invoked against notice pay at all? An employee remains an employee till the FnF formalities are completed within due legal framework. Just because a resignation/termination has ended the relationship, the employee does NOT become a vendor! And he/she is NOT raising a tax invoice to your company at any stage. I personally find this Service Tax on FnF debate (there have been a few other instances in this forum) very disturbing and ridiculous. At this rate, soon we will have HR managers (damagers?) will insist that every employee register themselves for Service Tax under the Finance Act before salaries are paid!
10th January 2014 From India, Mumbai
Service Tax is not payable on Salary or Notice Pay as the relation of employer and employee exists even on notice pay
11th January 2014 From India, New Delhi
#Anonymous
Please let us also know what is the rate of service tax you would levy on a "salary"? And of course the law that mandates this.
Section 65B(44) of Finance Act, 1994 as introduced w.e.f. 1-7-2012 reads as follows – “Service” means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include— (a) – - (b) a provision of service by an employee to the employer in the course of or in relation to his employment (c) – - .
Thus, services provided by employee to employer have been excluded from the definition of ‘service’ itself.
11th January 2014 From India, Mumbai
Service Tax is NOT levied on salary. Salary is paid on the basis of an employer-employee relationship and this is clearly exempted under the Service Tax law.
13th January 2014 From India, New Delhi
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