It is well known that when employees in the Information technology sector do not wish to serve the complete notice period, they are required to compensate for it by payment of an early exit sum.

As per the report in the leading business daily technology giants from Apple, Google, TCS, Oracle, HP, Wipro etc. are being served with notice from the indirect tax department to treat the payment received for early exit from the firm as taxable.

And at present firms receiving an amount equivalent to or at least Rs. 30 lakhs as early exit pay are on the lens of the indirect tax department.

In accordance with the GST rules, such payment shall continue to be included in the GST net as any payment received by the employer from employee is not exempted within its framework. And as quoted in one of the financial dailies, if these firms do not adhere and comply in line with the cues given, the implications will arise after the tax audit of these firms is done.

The direction in this respect seems to take cue from the earlier judgement in which the earlier recovery of food expenses from the employees for canteen services arose GST implications being deemed as a supply of service.

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