• How to get refund of GST charged in Service Indemnity bond

Dear Sir,
I was working with IPPB and I left IPPB after paying bond amount of Rs. 2 Lac. They charged GST at 18% on bond amount from me. How to get refund of this GST from IPPB or Tax authorities ?

Can you please guide me with relevant guidelines.
Thanks..
Asked 5 years ago in GST

Hi

Please let us know whether you're registered under GST. If you're​ not registered, there shall be no refund/claim of GST that has been paid.


This is a litigative matter. There has been divergent views on the same. There is no case law yet in favor or against.

Some experts are of the view that since this is a part of employer employee relationship, no GST shall be levied.

On the other hand, other experts argue that it is agreeing to the obligation to refrain from an Act or situation or to do an Act" specified under schedule II. And thus, opting out of the employer employee relationship.

Being a debatable issue, it is advisable to pay GST.

Lakshita Bhandari
CA, Mumbai
5687 Answers
909 Consultations

5.0 on 5.0

Dear Sir,

 

For claiming GST refund, you are required to have GST registration.

 

To claim GST refund, a you must file a refund application on GST portal in form RFD 01 within two years from the relevant date.

 

If the claim is in order, the applicant (i.e you) will receive an acknowledgement in form GST RFD 02 as well as an email and a mobile text, which specifies the date of filing the claim.

 

In case of a discrepancy in the refund application, the applicant will receive a form RFD-03 to rectify errors.

 

Prior to filing the claim, businesses must get the application certified by a chartered accountant or cost accountant if the amount of refund exceeds Rs 200,000.

 

If the amount of refund claim is less than Rs. 200,000, the applicant must submit a self-declaration to the effect that the incidence of tax has not been passed to any other person along with other documents.  

 

The GST refund is sanctioned within a period of 60 days from the date of filing the claim.

 

Karishma Chhajer
CA, Jodhpur
2450 Answers
29 Consultations

5.0 on 5.0

Dear Sir,

 

for this bond whether any document is provided to you ?

If yes please send me on my mail [deleted].

I am also based at ahmedabad so if required we can meet and try to work out best possible solution in the case.

Vishrut Rajesh Shah
CA, Ahmedabad
928 Answers
38 Consultations

5.0 on 5.0

You may get registered voluntarily. But, that would involve unnecessary compliances like monthly return filling etc.

Undoubtedly, IPPB must give you an invoice showing the charge of GST in the bond amount.

Also, you must check with your terms of employment if anything has been specifically provided for taxes on the bond amount. You may have an argument with IPPB for non payment of GST if nothing has been mentioned.

Lakshita Bhandari
CA, Mumbai
5687 Answers
909 Consultations

5.0 on 5.0

- Firstly you are not eligible for the refund. You are salaried individual person and not engaged in any business or profession. 

 

- Secondly question arises, why salaried individual person is liable for GST. On the date of resignation, relationship of employer and employee does not exist therefore you are liable to pay GST.

 

- You can ask for a tax invoice from the company which was generated internally just for record purpose.

 

Thanks

Vivek Kumar Arora
CA, Delhi
4825 Answers
1031 Consultations

5.0 on 5.0

Hi

 

No GST applicable as this recovery from employee is as per the contract between the employee and the employer, and in the course of the employment.

Since you are salaried and GST does not apply for the same.

You can not claim any refund in this case.

 

Hope it helps.

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

Hi,

 

Hope you are doing well !!

 

It is just a compensation for not fulfilling the bond terms and conditions.

 

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

 

 

Thanks & Regards,

Payal Chhajed

 

 

 

 

 

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

As per our view No GST applicable as this recovery from employee is as per the contract between the employee and the employer, and in the course of the employment. Even though this issue is a matter of litigation.

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

Dear Sir,

 

In that case please note it will not be possible to get GST Refund since legally on the notice pay company are required to collect GST and paid to the government for which employee leaving organisation can not claim refund or benefit except claiming it under expenses while filing ITR.

 

Vishrut Rajesh Shah
CA, Ahmedabad
928 Answers
38 Consultations

5.0 on 5.0

Dear Sir,

There is no option to claim the refund of GST amount paid by you. Since notice pay recovery is a taxable service under GST, therefore, GST is applicable to it.

 

Consider this transaction similar to the case where you are staying in a hotel and pay GST to on the rent paid. In that case, also you will not be eligible for a refund as you are the end consumer.

 

Trust this meets your understanding. In case of any clarification required, please revert.

 

Thanks.

Brijendra Tripathi
CA, Lucknow
143 Answers
3 Consultations

5.0 on 5.0

The Salary is Taxable under Income Tax Laws, however, the amount which has been deducted from your salary and not paid to you will not become taxable under Income Tax.

 

Hope this clarifies.

Brijendra Tripathi
CA, Lucknow
143 Answers
3 Consultations

5.0 on 5.0

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