Home GST Taxability of Gifts by employer to employee under GST.

Taxability of Gifts by employer to employee under GST.

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Supply made without consideration will be treated as supply as per Schedule I. Gift is a part of Schedule I. because, gifts is give free of cost. Even though, Gift is consider as supply. If value is more than Rs.50000. Gifts by employer to employee is covered under Schedule I of CGST act.

Employer to employee are related persons. However, Services provided by an employee to the employer in the course of or in relation to his employment are not treated as supply of services. Because, same has been covered in Schedule III of CGST act.

Further, As per Schedule I provides that gifts not exceeding Rs. 50,000 in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both. However, gifts of value more than 50,000 made without consideration are subject to GST, when made in the course or furtherance of business.

 What constitutes a “gift”?

The term ‘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.

As already mentioned 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, 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

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.

For Example, if free housing give to the employee hen the same will not be subjected to GST.

Read More :GST Model in India-top Highlight of Dual GST Model.

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