Till now, we have covered all the critical issues that one might have in mind while relocating to a new city.
For a long time, we’ve felt that our customers have been a little unclear of the tax implications of relocations, we felt it’s imperative to help you understand a little deeper about the tax charged over relocation services. Also, if you have not read our article on confused about the prices charged by packers and movers, do make sure that you read it.
Relocation expenses is a huge cost which most of India’s enterprises and employees incur. While this remains as an ever-increasing cost center for companies, most of this expense is reflected as reimbursements to employees.
Drive down deep into this article and get all those doubts cleared which are specifically related to relocation related taxations.
Effect on Personal Taxes:
If we refer to IT act of India 1961, expenses reimbursed by the employer to the employee by way of relocation or moving expenses shall not incur any personal taxes prima facie.
The word prima facie is very important over here because this nature of reimbursement is further classified into various sections. Consider it as a sample case; reimbursement done for households is free while the reimbursement done against movement of a vehicle is taxable.
keeping aside the taxation of reimbursements for packers and movers services, train/air tickets fee for relocating family and hotel accommodation can also come under the tax radar. Expenses pertaining to a duration of up to 15 days is exempted under the Income-Tax Act while everything above it remains taxable. This includes boarding and lodging expenses(including meals).
Treatment of GST Charged by Packers and Movers:
Going as per the books, total GST charged over relocation services varies drastically when it comes to packers and movers services. This service is broken down into Transportation (chargeable at 5% GST) and Packaging, Unpackaging, Loading, and Unloading (chargeable at 18% GST).
However, the application of GST is different when it comes to practicality. Some of India’s finest vendors who are working with HappyLocate charge 0% GST for personal movements and 5% or 12% GST in case the movement is billed to corporate.
While the taxation of relocation related services is so huge that it is just out of the scope of this article, please feel free to drop us an email at email@example.com if you have any queries related to your relocation and it’s quotations or click here.