Gift given by client - tax treatment

[Shan S]

does gift given by a client is it part of Turnover and does it attract GST. 

pl explain gst treatment   and income tax treatment for the same

 

[KALLESHAMURTHY MURTHY K.N.]

Sir,

1. Entry no. 2 of Schedule 1 of the CGST Act 2017

Activities to be treated as supply even if made without consideration – supply of goods or services or both between related persons or distinct persons as specified in section 25, when made in the course or furtherance of business provided the gifts not exceeding Rs.50000 in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.

1. Free gifts or articles along with the supply of a product is fall under the category of supply and taxable 

Gift exceeding Rs. 50000-00 given in the course of business is considered as a taxable turnover, and the rate of tax is at the rate specific to the gifted items HSN code.

1. Under Section 17(5)(h) of the CGST Act, 2017, the relevant provision of the said provision specifies that:

Notwithstanding anything contained in sub-section (1) of Section 16 and sub-section (1) of Section 18, input credit shall not be available in respect to the following, namely:-

“Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.”

Under this provision, ITC is reversible where the free gift is given without consideration.

1. The gift given by a client to an individual is taxable as business or professional income under the Income Tax Act, 1961.

[Ryan Vaz]

• GST: A gift received from a client is NOT taxable and NOT part of turnoverif it is voluntary and not linked to any supply.

• GST becomes applicable if the “gift” is actually consideration in disguise (linked to services or performance).

• Income-tax: Gifts from clients are taxable as business income, even if voluntary, except where specifically excluded.

[KASTURI SETHI]

Gift below the value of Rs. 50,000/- is not the part of turnover under CGST Act. If it exceeds Rs.50,000/- it will be part of turnover for payment of GST. Hence Gift is taxable only above Rs. 50,000/- in CGST Act.

[KASTURI SETHI]

You must know the definition and meaning and scope of the word, gift for tax treatment under CGST Act and Income Tax Act. The word, GIFT has not been defined in CGST Act. Hon'ble Supreme Court has defined it. The case is easily available on various websites.

 

[Sadanand Bulbule]

A genuine, voluntary gift from a client is not GST-taxable nor part of turnover subject threshold limit; however, for Income-tax purposes, such gift is taxable as business income if it arises in the course of professional relationship.

 

[Shilpi Jain]

Why is gift given is relevant to answer whether it is taxable?

The gift given and thereby any fees that you collect from client is not sole consideration?

More clarity on facts required.

AI Summary

Client gifts under GST: genuine voluntary gifts excluded from turnover; disguised consideration taxed, and ITC denied on freebies A gift received from a client is not included in GST turnover and does not attract GST where it is a genuine voluntary gift and not linked to, or in lieu of, any supply; if the 'gift' functions as consideration (including consideration in disguise) for goods or services, it is treated as a taxable supply and included in turnover, attracting GST at the applicable rate for the relevant goods/services. Where goods are disposed of by way of gift or free samples, input tax credit on such goods is blocked/reversible under the CGST Act, resulting in denial of ITC. For income-tax purposes, receipts from clients arising in the course of business or profession are generally taxable as business/professional income.