Valuation of Perquisites

[Ethirajan Parthasarathy]

A company purchases an item for 11800 (incl. GST of 1800/-) and gives the same to an employee in recognition of his good work. As per Income Tax Law, any item whose value exceeds 5000/- is to be treated as perquisites. As per GST Law, the company is not entitled to get credit of ITC. My question is in the above circumstances, the perq. Value to be considered is 11,800/- or 10,000/-

In another case, the item given to employee is costing Rs.1,18,000/- including GST of Rs.18,000/-. As per GST Law, anything valued above 50000/- will be treated as “supply” & hence the employer has raised an tax invoice for 100000/- plus 18000/- GST. The majority view is that 18000/- on this deemed supply has to be discharged separately since no ITC will be available for 18000/- paid at the time of purchase

My query is whether the perq. value is 118000/- or 136000/- or Rs.100000/- only. It must be noted the company is actually incurring expenditure towards GST both on purchase & on deemed sale.

AI Summary

Companies Must Include GST in Perquisite Valuation When ITC Cannot Be Claimed, Say Experts A company queried about the valuation of perquisites given to employees, specifically whether to include GST in the valuation. In the first scenario, an item worth 11,800 rupees (including 1,800 rupees GST) is given to an employee, exceeding the 5,000-rupee threshold for perquisites. Experts agreed the perquisite value should be 11,800 rupees, as the company cannot claim Input Tax Credit (ITC) on the GST. In the second scenario, an item worth 1,18,000 rupees (including 18,000 rupees GST) is given, and experts concluded the perquisite value should be 1,18,000 rupees, as it is deemed a supply under GST law.