Press Information Bureau
Government of India
Ministry of Finance
10-July-2017 17:09 IST
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.
It is being reported that gifts and perquisites supplied by companies to
their employees will be taxed under GST. Gifts upto 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 question arises as to what constitutes a gift. 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.
Another issue is the taxation of perquisites. It is pertinent to point
out here 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 or supply of services). It follows therefrom 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. Further, the Input Tax Credit (ITC) Scheme under GST
does not allow ITC of membership of a club, health and fitness centre
[section 17 (5) (b) (ii)]. It follows, therefore, that 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. The same would hold true for free
housing to the employees, when the same is provided in terms of the
contract between the employer and employee and is part and parcel of the
cost-to-company (C2C).
