New Delhi: The Central Board of Indirect Taxes and Customs (CBIC) on Friday clarified that it has neither sought nor has been asked for the imposition of Goods and Services Tax (GST) on salaries, stated news agency ANI.

With the clarification, the CBIC has shut down all the allegations carried out by reports that tax authorities want to impose GST on salaries paid to chief executive officers and regular employees. Under Section 7(2) schedule three of the Central GST Act 2017, the salaried services rendered by an employee to an employer is neither treated as a supply of goods nor as a supply of services, stated CBIC. “So salaries as such cannot be subject to GST,” added CBIC as per news agency ANI.

Besides, the Central Board Indirect Taxes and Customs also made it clear that it had not issued notices to any company regarding the inclusion of GST on salaries.

The GST charged on prices or charges by any supplier of goods or services from consumers does comprise all costs including the cost of raw material, capital goods, input services and employee costs. “But this does not mean that salaries paid to the employees by the employer are being taxed under GST.”

It must also be made clear that offices of an organisation in different states are regarded as distinct persons under Section 25 of CGST Act. Hence, what is taxable under GST is the supply of goods and services by the head office to its branch office and vice versa.

“Any tax charged on such supplies is available to the recipient as an input tax credit. This is not any additional cost to the organisation. Also, it is a worldwide practice under GST laws,” said the CBIC.

(With inputs from ANI)