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Gifts Upto Rs 50,000 to Employees Will Remain Out Of GST

Any club, health and fitness centre membership provided to the employees for free will not be subject to the new tax regime along with free housing as part of cost-to-company (C2C) package

Photo Credit : http://www.gstindia.biz

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The government has clarified that gifts received by the employees worth up to Rs 50,000 by an employer will not attract the Goods and Services Tax (GST) stating that the services by an employee to the employer in the course of his employment is outside the scope of the new tax system.

Any club, health and fitness centre membership provided to the employees for free will not be subject to the new tax regime along with free housing as part of cost-to-company (C2C) package.

The Finance Ministry said, “However, gifts of value more than Rs 50,000 made without consideration are subject to the GST during the course of business.”

The GST law does not define gifts since it is voluntary in nature and is made occasionally. Gifts cannot be demanded by an employee and cannot move for a legal battle for their right over right.

The ministry added that the service by an employee to the employer in the course of the employment is outside the scope of GST (both the supply of goods and supply of services).

Additionally, the Input Tax Credit (ITC) Scheme under the GST does not allow ITC of membership of a club, health and fitness centre. 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 GST would be out of ambit also 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 (C2C).


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