Is notice pay recovery from a resigned employee liable for service tax? & also recovered from the resigned employee? If any one having notification / circular in this regard, please share.........
From India, Mumbai
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24From India, Mumbai
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Notice Pay recovery is not a service tax related subject. Not applicable. Pon
From India, Lucknow
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From India, Lucknow
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Is there any specific notice in act or law ? pls update the same.
From India, Hyderabad
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From India, Hyderabad
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Ashok, it is not in the service tax rules (Note: there is no service tax act). So there is nothing to quote. Notice pay is not a service; it is a part of salary (negative salary if you wish). How can there be service tax on it?
From India, Mumbai
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From India, Mumbai
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Dear friends,
How did you get this idea to apply for ST from an ex-employee? It's funny though. There is no notification of ST regarding salary payment. You don't extend any service—do you mean to say that recovery/paying the Notice Pay to the ex-employee is a service? Good idea, send this suggestion to Mr. P.C. I'm sure he would reward you for such a suggestion, which would fetch the exchequer 12.36% of everybody's salary as this would amount to the single largest contributor to the government's kitty. (Don't get offended, just for fun).
Kumar S.
From India, Bangalore
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How did you get this idea to apply for ST from an ex-employee? It's funny though. There is no notification of ST regarding salary payment. You don't extend any service—do you mean to say that recovery/paying the Notice Pay to the ex-employee is a service? Good idea, send this suggestion to Mr. P.C. I'm sure he would reward you for such a suggestion, which would fetch the exchequer 12.36% of everybody's salary as this would amount to the single largest contributor to the government's kitty. (Don't get offended, just for fun).
Kumar S.
From India, Bangalore
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Dear friends,
We, HR group, are using this forum for knowledge sharing / message gathering. If anyone ‘post’ anything in this forum means, there is some information required and expecting help from knowledgeable persons and I hope no one is playing ‘funny games’ here (Loginmiraclelogistics please note and don’t comment unnecessarily in the “public forum” if you don’t know anything & don’t be act smart)
Additionally would like to inform you that in July 2012, there was some amendment in Service Tax rules and come to know that “some employers” started deduct service tax @ 12.36% on notice pay period payment (shortfall of notice period) from the resigned employee. The reason behind is, when employee submitted his resignation, the service agreement between both of them (employee and employer) has come to an end and employer is giving service to resigned employee for the remaining notice period. However, some dilemma in the service tax amendment and hence not followed by all the employers (employers are justifying with their own interpretation).
In case, any of you come across this situation or having the service tax amendment copy, please share, which may be useful to other members.
From India, Mumbai
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We, HR group, are using this forum for knowledge sharing / message gathering. If anyone ‘post’ anything in this forum means, there is some information required and expecting help from knowledgeable persons and I hope no one is playing ‘funny games’ here (Loginmiraclelogistics please note and don’t comment unnecessarily in the “public forum” if you don’t know anything & don’t be act smart)
Additionally would like to inform you that in July 2012, there was some amendment in Service Tax rules and come to know that “some employers” started deduct service tax @ 12.36% on notice pay period payment (shortfall of notice period) from the resigned employee. The reason behind is, when employee submitted his resignation, the service agreement between both of them (employee and employer) has come to an end and employer is giving service to resigned employee for the remaining notice period. However, some dilemma in the service tax amendment and hence not followed by all the employers (employers are justifying with their own interpretation).
In case, any of you come across this situation or having the service tax amendment copy, please share, which may be useful to other members.
From India, Mumbai
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Notice period salary is recovered while the person is in employment, and there is no service or contract. Hence, service tax is not applicable. The deduction is as per the terms and contract mentioned in the offer letter, and it has to be done as per that.
From India, Madras
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From India, Madras
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Guru,
I do not know who is this employer who has been deducting service tax on notice pay recovery. However, in spite of doing so much work in service tax, I have not heard such a thing before. Whoever has taken this interpretation obviously has no knowledge of service tax. He should refer to his CA for help.
The only case where service tax is applicable in reference to employee services is for SERVICES RENDERED TO EMPLOYEES, which covers amounts deducted for Canteen services, club facilities and the like.
There is no service tax on any payment made by employer to employee or for deductions made therefrom except where it is to pay for services that are already in the list of services covered in service tax. (Eg food / catering services is covered under service tax, so deduction from salary for catering services in factories requires payment of service tax on the same to be paid).
In fact I find loginmericaklogistics comment appropriate in this context.
From India, Mumbai
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I do not know who is this employer who has been deducting service tax on notice pay recovery. However, in spite of doing so much work in service tax, I have not heard such a thing before. Whoever has taken this interpretation obviously has no knowledge of service tax. He should refer to his CA for help.
The only case where service tax is applicable in reference to employee services is for SERVICES RENDERED TO EMPLOYEES, which covers amounts deducted for Canteen services, club facilities and the like.
There is no service tax on any payment made by employer to employee or for deductions made therefrom except where it is to pay for services that are already in the list of services covered in service tax. (Eg food / catering services is covered under service tax, so deduction from salary for catering services in factories requires payment of service tax on the same to be paid).
In fact I find loginmericaklogistics comment appropriate in this context.
From India, Mumbai
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Hi, I have been charged with the service tax on my notice pay recovery. please let me know where can i appeal against this.
From India, Noida
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From India, Noida
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Hello Guru_home,
While I am sure Loginmiraclelogistics never had any intention of poking fun at you or the topic you raised, please also try to take humor in your stride. Can you please post the relevant portion of the rules that you referred to ['............inform you that in July 2012, there was some amendment in Service Tax rules...']? This will enable the members to clearly understand what you are referring to.
Prima facie, as Saswatabanerjee mentioned, this doesn't make any logical sense. But knowing how our governments operate, there's always a chance of such things getting into policies. Another possibility could be that the rules may be saying something, and the companies may be interpreting it in the wrong way (which happens quite often).
I don't quite understand what you mentioned—".......when an employee submitted his resignation, the service agreement between both of them (employee and employer) has come to an end and the employer is giving service to the resigned employee for the remaining notice period...".
I find two points that need elaboration by the legal members:
1. The agreement you are referring to is an employment agreement, not a service agreement.
2. The resignation letter is only an expression of the intent of ending the agreement. The actual end comes once the relieving letter is issued.
Regards,
TS
From India, Hyderabad
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While I am sure Loginmiraclelogistics never had any intention of poking fun at you or the topic you raised, please also try to take humor in your stride. Can you please post the relevant portion of the rules that you referred to ['............inform you that in July 2012, there was some amendment in Service Tax rules...']? This will enable the members to clearly understand what you are referring to.
Prima facie, as Saswatabanerjee mentioned, this doesn't make any logical sense. But knowing how our governments operate, there's always a chance of such things getting into policies. Another possibility could be that the rules may be saying something, and the companies may be interpreting it in the wrong way (which happens quite often).
I don't quite understand what you mentioned—".......when an employee submitted his resignation, the service agreement between both of them (employee and employer) has come to an end and the employer is giving service to the resigned employee for the remaining notice period...".
I find two points that need elaboration by the legal members:
1. The agreement you are referring to is an employment agreement, not a service agreement.
2. The resignation letter is only an expression of the intent of ending the agreement. The actual end comes once the relieving letter is issued.
Regards,
TS
From India, Hyderabad
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Service Tax.pdf