GST Not Applicable on Recovery of Joining Bonus, Retention Bonus, WFH Allowance, and TAP Expenses

By: Admin
Date: September 03, 2024
Categories: Advance Ruling-New
Read Time: 4 Min

The AAR Karnataka, in the case of In re., M/s. Fidelity Information Services India (P.) Ltd. [Advance Ruling No. KAR/ADRG/31/2024 dated July 02, 2024], ruled that GST is not leviable on the recovery of joining bonus, retention bonus, work-from-home allowance, and expenses under the Tuition Assistance Program (TAP). These benefits, provided to employees as per the contractual agreement, are considered perquisites and are therefore exempt from GST.

Key Points:

  • Context: M/s. Fidelity Information Services India Private Limited (“the Applicant”) offers various employee benefits, including retention bonuses, joining bonuses, TAP, and work-from-home allowances. These are provided to incentivize employees but are recoverable if the employee voluntarily exits the organization within a stipulated period.
  • Ruling: The AAR Karnataka determined that such recoveries align with the principles of forfeiture of salary or bond recovery, which are not taxable under GST. The ruling is supported by Circular No. 172/02/2022-GST, which clarifies that perquisites provided by employers under a contractual agreement are not subject to GST.

#AARKarnataka #GSTExemption #JoiningBonus #RetentionBonus #WorkFromHome #TuitionAssistanceProgram #EmploymentBenefits #GSTCompliance #AdvanceRuling

https://aaermlawassociates.com/aar-karnataka-gst-exemption-employee-benefits/

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