Jobseekers may have to pay the price Goods and Services Tax (GST) If they do not meet the notice period mentioned in their offer letter at the time of recruitment. The Authority of Advance Ruling (AAR) in its recent decision on GST has said that GST can be levied on various recoveries from the employee for not completing the notice period. These recoveries include salary during notice, group insurance, telephone bills etc. In short, an employee will be liable to pay GST on his monthly salary for not serving the notice period.
Speaking on the GST levied on the employee for not serving the notice period, Balwant Jain, a Mumbai-based tax and investment expert said, “As per the recent decision of AAR, it is the responsibility of the employers to charge the recovery through the reverse charge mechanism. From the employee during the notice period. As the recruiters are in the prescribed conditions, they can ask the job hopper to pay the GST as the employee is not serving the notice period.”
Explaining in detail the GST charges on one’s notice payment; Jitendra Solanki, SEBI registered tax and investment expert said, “The recovery from the employee during the notice period includes bills like group insurance, mobile bills etc. In fact, this notice may also be on the full salary of the employee during payment to the employer. An employee leaving the organization without serving the notice period may charge 18 per cent GST on the total recovery.
SEBI registered expert further said that 18 per cent GST can be levied only if the employee has not completed the notice period. Otherwise, it is the employer who will pay GST on the employee’s monthly salary. He also said that the notice period has been mentioned in the offer letter and it ranges from one month to 3 months. Therefore, an employee is advised to look at not only the pay break up but also the notice period while accepting the offer of his new recruiter.
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