Taxability of Gifts to Dealers/Sub-Dealers Under GST

[Ramanathan Seshan]

Dear experts,

Company A provides gifts to its dealers and sub-dealers during festivals, upon achieving certain sales targets, or when new branch stores are opened/expanded.

Would such gifts be considered taxable under GST, especially considering that the definition of 'consideration' includes any inducement for a supply? If they are indeed taxable, how should these be disclosed in GSTR-1?

AI Summary

Performance-Based Dealer Incentives Taxable as Supplies: GST Compliance Requires Transparent Valuation and Documentation Legal Analysis Summary:A company provides performance-based gifts to dealers and sub-dealers upon achieving specific sales targets. Under GST regulations, these gifts are considered taxable supplies, not voluntary transfers. The gifts must be disclosed in GSTR-1 based on fair market value. Input tax credit (ITC) may be allowed if the gifts are linked to business performance milestones. Companies must ensure transparent communication of reward criteria, maintain proper documentation, and comply with tax implications under GST and income tax laws.