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CA Intermediate · Taxation · Supply under GST

Meenakshi Traders, a registered dealer in Madurai, gifts a set of sarees costing Rs 18,000 to an employee, Kavya, on Diwali. The gift is given by the employer without any consideration. Kavya's total gifts from the employer during the financial year are Rs 15,000 prior to this one, so cumulative value is Rs 33,000. Which statement is correct under the CGST Act, 2017?

No GST arises. Gifts given by an employer to an employee without consideration are treated as supply only when their value in a financial year exceeds Rs 50,000. Here the total is Rs 33,000, which is within the limit, so the sarees gift is not a taxable supply.

  1. AThe sarees gift is not a supply because gifts to employees are always outside GST
  2. BThe gifts are a supply only to the extent of the amount exceeding Rs 50,000 in the year
  3. CGifts up to Rs 50,000 in a year per employee are not treated as supply, so no GST arises on the Rs 18,000 giftCorrect
  4. DThe Rs 18,000 gift alone is a supply because it exceeds Rs 10,000

Explanation

Under Schedule I, a permanent employer-to-employee gift without consideration is a supply only if the value of gifts to the employee in a financial year exceeds Rs 50,000. Here the cumulative total is Rs 33,000, which is below Rs 50,000, so no GST is attracted. Option D invents a Rs 10,000 limit. Option A is wrong because gifts above Rs 50,000 are taxable.

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