GST ON GIFTS
Gift to employees’ worth more than 50K is treated as “supply” and is subject to GST.
Similarly under income tax law Gifts “in kind” in excess of ₹50K received from employer is treated as perquisites and taxed under the head salaries.
Relevant issues :-
- Whether the company can take ITC incurred on purchase of such Gifts.
- Such Gifts are taxable under both IT rules and also under section 56(2) (X) of the Income tax.
I presume section 17 will override section 56(2) (X).
- What should be the accounting entries when tax invoice’s raised for giving away Gift in kind in excess of 50K given to employees on special occasion like Diwali.
Debate on GST Applicability for Employee Gifts Over 50K: Supply Status and ITC Claims Under Section 17(5)(h) Discussed. A discussion on the applicability of GST on gifts to employees focused on whether gifts exceeding 50,000 are considered a 'supply' and thus subject to GST. The conversation debated if Input Tax Credit (ITC) could be claimed for such gifts. Some participants argued ITC is blocked under section 17(5)(h) for gifts, while others believed deemed supply allows ITC. The discussion referenced a circular clarifying ITC eligibility when gifts are treated as deemed supply. Accounting entries for such transactions were also explored, with varying opinions on the interpretation of tax provisions. (AI Summary)
TaxTMI 
TaxTMI 
TaxTMI 
