No GST on gift up to Rs 50,000 by employer

Tribune News Service

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New Delhi, July 10

The government today said gifts up to a value of Rs 50,000 per year by an employer to his employee are outside the ambit of GST.

However, gifts of value more than Rs 50,000 made without consideration are subject to GST, when made in the course or furtherance of business.

The clarification comes after reports that gifts and perquisites supplied by companies to their employees will be taxed under the GST. The government also said the tax incidence on sanitary napkins before and after GST is the same or less.

On the question of what constitutes a gift, the government has said that gift has not been defined in the GST law. In common parlance, gift is made without consideration, is voluntary in nature and is made occasionally. It cannot be demanded as a matter of right by the employee and the employee cannot move a court of law for obtaining a gift.

On the issue of taxation of perquisites, the government has pointed out that the services by an employee to the employer in the course of or in relation to his employment is outside the scope of GST (neither supply of goods nor supply of services).

“It follows there from that supply by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST”, the government said.

Further, the Input Tax Credit (ITC) Scheme under GST does not allow ITC of membership of a club, health and fitness centre.

If such services are provided free of charge to all the employees by the employer then the same will not be subjected to GST, provided appropriate GST was paid when procured by the employer.