Gifts to employees

[SHYAM PATHAK]

Dear Sir,

May we claim GST ITC on gifts given to employees of above ₹ 50000 or below 50000.

Pls clarify.

[Shilpi Jain]

If given away as gifts not eligible as credit. However if it is given by way of an obligation on the part of the employer, for the performance of the employee it will no more be a gift and would be eligible as a credit

[Ganeshan Kalyani]

Input tax credit is not eligible on any item given away as 'free'. However, as opined by Shilpi Mam if it is given as a token of appreciation for any achievement of the emplyee in job then it will no more be a gift and hence credit would be eligible.

[KASTURI SETHI]

SH.SHYAM PATHAK JI,

If it is given on the basis of performance, it is not a gift. Thus out of definition of 'gift'. Examine your issue from this point of view.

[Shilpi Jain]

Have a look at this article which discusses gift and obligation in the context of Manufacturer distributor

https://www.taxtmi.com/article/detailed?id=8992

AI Summary

Input tax credit on gifts to employees is disallowed unless the provision is an employer obligation or performance-related reward.
Goods given as gratuitous gifts to employees do not qualify for input tax credit; however, where the provision is an employer obligation or a reward tied to employee performance and thus not a gift, the transfer may be eligible for input tax credit, requiring factual and legal characterisation of the supply.