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Gifts from the employers - GST provisions

CS Swati D Rawat
Employer Gifts Up to 50,000 Exempt from GST; Gifts Over Limit Taxed in Business Contexts Under GST Rules. The government clarified that gifts up to 50,000 from employers to employees, including free memberships to clubs and fitness centers, are exempt from GST. Services provided by employees to employers in the course of employment are outside the GST scope. Gifts exceeding 50,000 without consideration are subject to GST if made in business contexts. The GST law does not define gifts but considers them voluntary and occasional. The exemption applies only to employer-provided gifts. The 50,000 limit is per employee annually, and perquisites as part of the cost-to-company package are not subject to GST. (AI Summary)

Govt says gifts of up to ₹ 50,000 by employer exempt under GST

On Monday governmnt clarified that gifts worth up to ₹ 50,000 by an employer to its employees as well as free membership of clubs, health and fitness centres will not attract goods and services tax (GST). Also, the services by an employee to the employer in the course of or in relation to his employment is outside the scope of the new indirect tax regime, it said.

Any club, health and fitness centre membership provided by an employer to its all employees free of charge will not be subject to GST. The same would hold true for free housing as part of costtocompany package.

Also the finance ministry  said gifts of up to ₹ 50,000 in a year by an employer to his employee are outside the ambit of GST. 'However, gifts of more than ₹ 50,000 made without consideration are subject to GST, when made in the course or furtherance of business,' the ministry said. While the GST law does not define gifts, the ministry said for tax purposes gift is something that is made without consideration, is voluntary in nature and is made occasionally.

Goods and Services Tax - GST
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Sanndeep Kumar on Jul 13, 2017

₹ 50,000/- in a Year? and is there any exemption of gifts given on Festivals ?

CS Swati D Rawat on Jul 13, 2017

Yes ₹50,000/- for a year. Gifts will include gifts given on festivals adhering to maximum limit prescribed i.e. ₹50,000/-.

sanjeev goel on Jul 13, 2017

Only gifts from employer upto ₹ 50,000/- are out of GST or the gifts from anybody like free samples etc.??

CS Swati D Rawat on Jul 13, 2017

As per my understanding it's only gifts from employers.

Abhishek Jain on Jul 13, 2017

Dear madam,

Is it 50,000 per employee or 50,000 on all employees together.

sanjeev goel on Jul 13, 2017

Sir it is 50,000/- per employee.

pradeep kataria on Jul 17, 2017

Dear CS Swati

What would be the treatment where the employer provides services to its empoyees on concessional basis e.g. providing vehicle on concessional rent basis for private use etc. ? Whether it falls under Schedule I or clause 4 of Schedule II.

Since all perquisites provided by the employer to employee are part of CTC and hence is n't it out of GST purview as services provided by employee to employer is outside the purview of GST and hence payment of services provided by employee to employer should also be outside GST purview.

Please advice.

thanks

CA.Pradeep Kataria

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