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

Can GST Input Tax Credit be claimed on employee gifts? Freely given gifts ineligible; performance-related items may qualify. A discussion on whether Goods and Services Tax (GST) Input Tax Credit (ITC) can be claimed on gifts given to employees. The consensus among participants is that gifts given freely are not eligible for ITC. However, if the items are provided as part of an obligation or as recognition for performance or achievements, they are not considered gifts and may be eligible for ITC. Participants emphasize examining the nature of the transaction to determine eligibility for credit.