• GST Applicability on Service Bond

Sir/ Madam,

I am a banker and I was working with one of the public sector banks earlier. When I joined the bank we had to execute a service bond of a specific amount in case if I was to resign before a period of 3 years. At the time of joining and execution of bond, GST did not came into effect. Also as per bond agreement it is nowhere mentioned that any type of tax will be applicable on the amount of service bond. Since I left the organisation before period of 3 years I have deposited the bond amount as mentioned in the agreement. Now, my employer wants me to deposit GST at the rate of 18% additionally on the amount of service bond (which is not mentioned in the agreement anywhere).

Kindly guide me whether GST is to be paid on the amount of service bond.

Thankyou
Asked 6 years ago in GST

No need to pay GST amount on the amount of service bond. It is just a compensation for not fulfilling the bond terms and conditions. As there is no supply of services involved therefore no need to pay GST and also this payment is against the employment contract.

Vivek Kumar Arora
CA, Delhi
4825 Answers
1031 Consultations

5.0 on 5.0

No, you are not liable to pay GST in the service bond amount.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Hi,

There is no need for you to pay GST on the amount of the service bond.

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

No gst applicable on service bond amount.

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

Hi

Since such payment is part of the contract of an employer employee relationship, no GST shall be applicable on it.

Lakshita Bhandari
CA, Mumbai
5687 Answers
909 Consultations

5.0 on 5.0

I assume that the query has already been resolved by my fellow colleagues. Please feel free to get back in case any part of it has been left unattended/ unresolved.

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

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