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Happy at that costly gift your company gave you? Be ready to shell out GST

Author: IANS/Monday, July 10, 2017/Categories: TRACKING THE GST

Happy at that costly gift your company gave you? Be ready to shell out GST

New Delhi (IANS) Gifts of above Rs 50,000 value in a year, when given by the employer to the employee without consideration and outside the contractual agreement, will come under the ambit of Goods and Services Tax (GST), the Finance Ministry said.

Though the term gift has not been defined in the GST law, in common parlance, it is made without consideration, is voluntary in nature and is made occasionally. Gift cannot be demanded as a matter of right by the employee and the employee cannot move a court of law for obtaining a gift.

The government clarified that the perquisites by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST. 

Further, the Input Tax Credit (ITC) Scheme under GST does not allow ITC of membership of a club, health and fitness centre. "It follows, therefore, that if such services are provided free of charge to all the employees by the employer then the same will not be subjected to GST, provided appropriate GST was paid when procured by the employer."

The same would hold true for free housing to the employees, when the same is provided in terms of the contract between the employer and employee and is part and parcel of the cost-to-company (CTC), it said.

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S Vijaykrishnan
S Vijaykrishnan

IANS

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