Under the GST regime, there was some confusion on the aspect of gifts and perks, given by an employer to an employee, which is part of Cost To Company (CTC), and maybe subjected to performance.
Clearing doubts, Govt. has issued notification, which states that gifts up to Rs 50,000 / year given by an employer to an employee is exempted from GST. This means that companies can now pass on incentives, perks, and gifts to employees till Rs 50,000, without paying any tax.
However, Govt. has laid out some guidelines for understanding what exactly a gift is.
No GST On Gifts, Perks By Employer
In the latest notification, Govt. has said: “It is being reported that gifts and perquisites supplied by companies to their employees will be taxed under GST. Gifts up to a value of Rs 50,000/- per year by an employer to his employee are outside the ambit of GST..”
Besides, perks such as membership to clubs, fitness centres, gyms etc are also exempted from GST, provided that:
- These perks were part of the contract between the employer and the employee
- Appropriate GST was paid by the employer when these services were procured by the employee
Interestingly, Govt. has also made it clear, what exactly a gift is.
Although Govt. has admitted that gifts are not separately defined under GST, but as per common parlance:
- Gift is made without consideration
- Gift is always voluntary in nature
- Gifts can be made occasionally, and not repeatedly.
The notification said, “Gifts cannot be demanded as a matter of right by the employee and the employee cannot move a court of law for obtaining a gift.”
Businesses Mandated To Showcase GSTIN On Signboards
In a related development, Govt. has ordered that all businesses will be required to showcase their GSTIN on signboards so that customers are aware of their GST inclusion.
A tax official clarified: “Every taxable person is required to display his GSTIN number on name board or sign board of business and is also required to display his registration certificate in business premises so that a citizen can easily find out whether a person is registered or not..”
Govt. has made it clear that display of GSTIN is a legal requirement now.
GSTIN is a 15-digit number issued after registering with GST portal.
It is still not clear whether online businesses, which have no physical address or signboard, need to display their GSTIN on website/app or not.