Gifts above Rs 50,000 per year by an employer subject to GST: Government

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The government has said gifts of value of up to Rs 50,000 given by an employer to its employee are outside the ambit of GST. Perquisites such as membership of a club or health and fitness centre provided free of charge to all employees by an employer will not be subject to GST if they are part of the employment contract and appropriate GST was paid when these services were procured by the employer, finance ministry said in a statement on Monday.

Free housing to employees, when the same is provided in terms of the contract between the employer and the employee and is part and parcel of the costto-company, will also not attract GST.

“It is being reported that gifts and perquisites supplied by companies to their employees will be taxed under GST. Gifts upto a value of Rs 50,000/- per year by an employer to his employee are outside the ambit of GST,” the statement said.

Only gifts of value more than Rs 50,000 made without consideration are subject to GST when made in the course or furtherance of business.

“This clarification brings clarity that any supply from employer to employee which is part of the CTC (cost-to-company) will not be considered a supply,” Bipin Sapra, tax partner at EY, said.

The finance ministry also clarified what constituted a gift. “Gift has not been defined in the GST law. In common parlance, gift is made without consideration, is voluntary in nature and is made occasionally,” it said. “It cannot be demanded as a matter of right by the employee and the employee cannot move a court of law for obtaining a gift.”

Finance ministry has also offered an elaborate explanation for taxation of perquisites. The services by an employee to the employer in the course of or in relation to his employment is outside the scope of GST, the ministry said.

DUTY ON SANITARY NAPKINS
The finance ministry has said before GST, sanitary napkins attracted a total tax of 13.68 per cent, therefore were put in the 12 per cent slab. Reducing GST on sanitary napkins to zero would mean manufacturers will also not be able to claim input tax credit and land them at a disadvantage vis-à-vis imports.

Source : http://economictimes.indiatimes.com/news/economy/policy/gifts-above-rs-50000-per-year-by-an-employer-subject-to-gst-government/articleshow/59529934.cms

items of gst with rates    GST 0% Rate Category Items List  

items of gst with rates    GST 5% Rate Category Items List 

items of gst with rates    GST 12% Rate Category Items List

items of gst with rates    GST 18% Rate Category Items List 

items of gst with rates    GST 28% Rate Category Items List 

 

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