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

Perquisite valuation: treat employer's outlay inclusive of GST as taxable benefit, avoid double counting GST in value.
When an employer supplies an item to an employee and ITC on that item is not available, the perquisite is valued at the employer's total cost inclusive of GST. For gifts that trigger a deemed supply under GST (gifts above the specified threshold), forum contributors-citing a government circular on gifts and ITC-conclude the perquisite value remains the original inclusive cost and should not be increased by separately adding GST on a deemed supply, although a dissenting view was recorded.