GST on Employment in India — Taxed or Outside GST?

No. Employment services — an employee working for an employer under a contract of service — are excluded from GST by Schedule III of the CGST Act. The employer does not charge GST on top of salary and the employee does not register for GST. Only income tax (TDS under Section 192) and professional tax apply to employment remuneration, not GST.

No. An individual earning only salary income does not supply any taxable service under GST, so no GST registration is required regardless of the salary amount. Registration is triggered by making taxable supplies (for example, freelancing or business income) above the ₹20 lakh threshold — not by employment.

An employee works under a contract of service — under the employer's control, using the employer's tools, cannot substitute themselves — and their services are outside GST under Schedule III. An independent contractor works under a contract for service, controls their own method, can take multiple clients, and must charge 18% GST if turnover exceeds ₹20 lakh. TDS is under Section 192 for employees and Section 194J for contractors.

Yes, once turnover crosses the threshold. A freelancer or consultant supplies a taxable service, so GST registration is mandatory when aggregate turnover exceeds ₹20 lakh a year (₹10 lakh in special-category states) and they then charge 18% GST on invoices. Below the threshold they can remain unregistered, though registration is required regardless if they make inter-state supplies of goods.

18%. Professional, technical and consultancy services attract 18% GST. A registered consultant charges 18% on the invoice; the client, if registered and using the service for business, can claim it as Input Tax Credit. TDS under Section 194J applies separately on the fees.

It depends on the type of director. A whole-time or executive director on payroll is treated as an employee, so their salary is outside GST (Schedule III). Fees paid to a non-executive or independent director are a taxable supply, and the company pays 18% GST under the Reverse Charge Mechanism — the director does not charge it.

The company. Director fees, sitting fees and commission paid to a non-executive or independent director fall under RCM (Notification 13/2017-CT(R)), so the company self-assesses and pays 18% GST directly to the government in cash — it cannot be paid using existing input tax credit. The company can then claim that 18% as ITC if the fees are for business.

No. A whole-time or managing director who is on the company payroll and whose remuneration is taxed as salary with TDS under Section 192 is in an employer-employee relationship. That remuneration is outside GST under Schedule III. Only fees to independent or non-executive directors attract 18% GST under RCM.

Yes. Manpower supply, staffing, labour contracting and placement services are taxed at 18% GST (SAC 9985). The agency is the supplier and charges 18% on its full invoice to the hiring company — including the salary cost passed on and its margin. The hiring company can claim ITC if the staff are used for business. This rate was not changed by the GST 2.0 reform of 22 September 2025.

No. The wages a manpower agency pays to its own workers are outside GST — that is an employment relationship. GST at 18% applies only to the agency's service supply to the hiring company. Because the recipient can usually claim that 18% as ITC, the effective cost is generally the agency's margin rather than the full tax.

The employee never pays GST on a perk. GST can arise on the underlying third-party supply: a caterer providing canteen food charges 5%, an insurer charges GST on a group premium, and a car for personal use carries 18%. However, ITC on food, personal-use vehicles and (usually) health insurance is blocked under Section 17(5), so the employer often cannot recover it. Note that retail health and life insurance for individuals became GST-exempt from 22 September 2025.

No. Notice pay recovered by an employer when an employee leaves without serving notice is treated as compensation for tolerating an act, not a supply of service. CBIC Circular 178/10/2022-GST clarified that such amounts are not liable to GST. Salary paid by an employer in lieu of notice is also within the employment relationship and outside GST.

Generally no. ITC on health insurance is blocked under Section 17(5) of the CGST Act when it is for personal consumption of employees, though it is allowed where providing the insurance is obligatory under a law. Some tribunals have allowed ITC in specific employee-welfare situations, so the position should be confirmed for your facts before claiming.

This is a disputed area. Following the Supreme Court's Northern Operating Systems ruling, deputing an employee to a related entity can be treated as a supply of manpower service taxable at 18%, depending on the exact arrangement and who bears the employment relationship. Where secondment amounts are significant, obtain a specific opinion rather than assuming Schedule III applies.

No. The GST 2.0 rationalisation effective 22 September 2025 restructured goods and some service rates into a two-slab system (5% and 18%, plus a 40% demerit rate) but did not touch the employment position. Employee-to-employer services remain outside GST under Schedule III, director fees stay at 18% under RCM, and manpower supply and consultant fees remain at 18%.