‘Fringe benefits’ to employees and directors will be subject to GST :
As per para 2 of Schedule I of CGST Act, supply of goods or services between related persons will be ‘supply’ even if made without consideration. It will be subj ect to GST.
As per explanation (a)(iii) to section 15 of CGST Act, ’employer and employee’ are ‘related persons’
As per para 4(b) of Schedule II of CGST Act, if goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services.
This can cover ‘fringe benefits’ given to employees or directors by a company and should be subj ect to GST.
This is backdoor entry of ‘fringe benefit tax’ which was introduced under income tax provisions.