The ruling said that as in the case of notice pay, the company is actually “providing a service” to an employee and hence GST should be applied on that. Under the GST framework, tax is levied on any activity that is viewed as supply of service-whether directly or deemed supply.
This tax complication comes at a time when top companies are complaining of high attrition. The ruling in the case of Bharat Oman Refineries is set to result in scrutiny by the tax department in the coming months as there’s already confusion over the issue.
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