No GST has been demanded on the salaries paid to the CEOs or employees of firms, CBIC said in a clarification.

In a major breather for CEOs and CXOs of companies, the Central Board of Indirect Taxes & Customs (CBIC) on Friday said that their salaries will not be subject to GST. In addition, the CBIC said that the media report in this regard alleging that tax authorities are mulling to impose GST on salaries paid to employees is factually incorrect and misrepresents tax authorities. No GST has been demanded on the salaries paid to the CEOs or employees of firms, CBIC said in a clarification. On Thursday, there were reports that the government is mulling to levy an 18 percent GST on salaries of CEOs and CXOs of companies. The tax department is already questioning the firms and banks with respect to cross-charging, the report added. The move generated an outrage due to confusion about identifying services for the charge mentioned.

The services provided by one office of an organisation in a particular state to another office of the same in another state will face goods and services tax, or GST.

Also read: ArcelorMittal to acquire Essar Steel: SC sets aside NCLAT judgment; why it’s big win for lenders

The government also said that it has already been made clear through its press release on July 10, 2017, that the services by an employee to the employer in the course of or in relation to his employment are outside the scope of GST (neither supply of goods nor supply of services).

Menawhile, GST is an indirect tax imposed on the supply of goods and services. It is a comprehensive multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except few. It is meant to be refunded to all parties in the various stages of production other than the final consumer and as a destination based tax.