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CA Intermediate · Taxation · Supply under GST

Mehta Industries Ltd., Mumbai, gives each employee a Diwali gift of Rs 8,000 value during the year. The gifts are made out of goodwill and no consideration is received. Under CGST law, what is the treatment?

The gifts are not a supply. Gifts given by an employer to an employee are deemed supply only if their value exceeds Rs 50,000 per employee in a financial year. Rs 8,000 is within the limit, so no GST arises on these gifts.

  1. ASupply, because it is made between employer and employee
  2. BSupply, since gifts to employees are always taxable
  3. CNot a supply, because gifts not exceeding Rs 50,000 in a financial year per employee are excludedCorrect
  4. DNot a supply, only if the employees pay GST themselves

Explanation

Schedule I treats gifts by an employer to an employee as supply only when the value in a financial year exceeds Rs 50,000 per employee. Rs 8,000 is below the limit, so it is not a supply. Option one wrongly ignores this threshold.

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