Gst On Free Goods, Gifts Or Supplies Made To Employees By Employers?

Rahul Rai
watch_later 3 years, 10 months ago

Whether GST is to be charged on free gifts given by a company to its employees? Whether all supplies made by an employee by a employer are taxable or there is any exemption?

  • chatComments
    Hint: Concept of Prequisites under income tax act is applied here. - Pulkit Sharma
    Even i would like to quote Fringe benefit tax of income tax. Whether its made applicable here. Tax revenue will jump high if so. - Rahul Rai
1 Answer

Pulkit Sharma watch_later 3 years, 10 months ago

Every taxable supply is to be taxed under GST. Schedule I and schedule III of CGST ACT, 2017 should help you in this regard.

For instance, schedule III which declares certain supplies to be not considered as supply of goods or services and so there will no tax on this supplies.

Services by an employee to the employer in the course of or in relation to his employment. So there will be no tax on services provided by an employee to employer. But you have asked whether supplies by employers are taxable or not.

You should refer schedule I for this, which specifies supplies which should be considered as supply of goods or services even if they are provided for free of cost.

2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business:
                 Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.

This is taken from schedule I, so gifts provided by employers to employees upto 50,000 Rs. is exempt.

  • chatComments
    It says gifts whether free rent accomodation is included in this? Also free car rental, interest free loans etc. included in this? - Rahul Rai
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