TDS : Employer and Employee - advantages and disadvantages discussion

1. TDS on salary to employees:
a. What are the advantages and disadvantages for the employer?
b. What are the advantages and disadvantages for the employee?

2. TDS on perks to employees:
a. What are the advantages and disadvantages for the employer?
b. What are the advantages and disadvantages for the employee?

3. GST on perks to employees:
a. What are the advantages and disadvantages for the employer?
b. What are the advantages and disadvantages for the employee?

4. Are perks given to the sales team exempted from tax?

Dear Rakesh,

It appears that you have some misgivings about Tax Deduction at Source (TDS). Tax deduction is a compulsion and not a choice. If TDS is mandatory, then where is the question of advantages or disadvantages to either party? For timely deduction and further submission of the IT return, the employee has an advantage by not receiving a notice from the IT department. Another advantage of timely payment is that there is no need to pay penalties. There are advantages for employees as well. When the employer deducts TDS, at the time of filing the IT return, the employee can claim input credit for the amount deducted by the employer.

Additionally, TDS is calculated on the gross salary. If the perks provided to an employee exceed Rs 50,000 per month, then it attracts GST.

Thanks,
Dinesh Divekar

Thank you for the clarification, Mr. Dinesh.

A few more clarifications on the same:

1. Are the TA (Travel Allowance) given to sales or any other employees tax-exempt? Is there any limit?

2. What happens to the following perks given to senior executives/VP/Dir/MD/CMD?
- Mediclaim
- Mobile Expenses
- Landline & Internet Expenses
- Fuel Expenses
- Travel Expenses
- Vehicle Maintenance Expenses
- Newspaper & Journal Expenses
Are these tax-exempt? Is there any limit to them?

3. Regarding GST - as clarified, if it is above 50k, does it include the regular tax on perks (if deducted) and then GST on that?

I think you had better speak to the CA in your company or to your company's auditors. You are completely confused in all matters concerning tax.

As for GST, it does not apply to any employee-related payments, i.e., any payment made by the employer to the employee in the course of employment.

OK, thanks. Is it fine if I reach you over your number?

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OK, thanks.

Is it fine if I reach you over your number?

Dear All,
AS per Schedule III of the Central GST Act, 2017, services by an employee to the employer in the course of or in relation to his employment will not be treated as supply of goods or services. Thus, the salaries and other allowances that are paid by the employer to the employee, as part of the employment contract are outside the purview of GST. Also, all reimbursements of expenses incurred by employees, in the course of their employment, would be outside the levy of tax under GST.
The employer and the employees are deemed to be ‘related persons’, in terms of Section 15(5) of the CGST Act. As per Entry No.2 of the Schedule I to the CGST Act, supply of goods or services or both between related persons when made in the course or furtherance of business would be subject to levy of tax under GST even when they are made without consideration.
Moreover, as per Schedule I, gifts exceeding Rs 50,000/- in value in a financial year by an employer to an employee shall be treated as supply of goods or services or both.
Experts in GST can add more value to this subject. But in future HR will be required to restructure the CTC based on GST compliance taking guidance from experts.
Thanks & Regards,
S K Bandyopadhyay(WB)
USD HR Solutions
+9198310 81531
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Thank you for the clarification about the GST.

Dear All,

Please let me know on what basis TDS has to be deducted when the employee's salary structure is as follows:

Basic: 15000/-
HRA: 7500/-
Travelling Allowance: 800/-
Medical Allowance: 625/-
Spl. Allowance: 6075/-
Total Gross Salary: 30000/-
Mobile Allowance: 500/-
Internet Allowance: 500/-
Local Travel: 3000/-
Total CTC: 34000/-

How to deduct on this scale, please guide me.

Regards,
Lohith