Gifts by employer to employee

[Archna Gupta]

Dear Sir

Please clarify the below three queries:

1. Suppose an employer gives 60000/- in cash to his employee as gift. Will it cover in Sch-I?

2. If gifts are given in kind to its employees whether the employer can avail ITC paid at the time of purchase of these gift items?

3. If employer pays incentive to its employees which is not mentioned in the employment contract and not part of his CTC but due to trend in industry he gives some incentive to some of his employees. Whether this will be covered in Schedule-I?

Please reply.

Regards

Archna Gupta

AI Summary

Gifts exceeding threshold are taxable supplies and may attract GST, input tax credit implications and ITC reversal obligations.
Cash gifts or cash incentives from employer to employee are treated as money and not supplies under Schedule I, whereas gifts in kind supplied to employees are supplies of goods: lower value occasional gifts are exempt from being treated as supplies by proviso, but gifts exceeding the statutory threshold are taxable, allowing the employer to be liable for GST and to claim ITC subject to conditions or to reverse ITC when required under the reversal mechanism.