Skip to content

CA Intermediate · Taxation · Supply under GST

Mehta Textiles Ltd, Surat, gifts a laptop costing Rs 40,000 to its employee Ravi on his marriage in November. Ravi has been in service for several years, and the company makes no other gift to him that year. Under CGST Act, 2017, what is the GST treatment of this gift?

The gift is not a supply. Gifts from an employer to an employee are treated as supply without consideration only when their value exceeds Rs 50,000 in a financial year. Since the laptop costs Rs 40,000, it falls within the limit and attracts no GST.

  1. ANot a supply, because gifts not exceeding Rs 50,000 in value in a financial year by an employer to an employee are not treated as supplyCorrect
  2. BSupply, because any gift by an employer to an employee is made in the course of business
  3. CSupply, because the laptop was purchased with input tax credit
  4. DNot a supply, because gifts to employees are always outside GST irrespective of value

Explanation

Schedule III-linked rule in Schedule I: permanent transfer or gifts between related persons (employer and employee) are deemed supply without consideration only if the value exceeds Rs 50,000 in a financial year. Here the gift is Rs 40,000, within the limit, so it is not a supply. Option 4 is wrong because gifts above Rs 50,000 would be taxable.

Did you get it right without looking?

One question tells you little. A timed set on Supply under GST shows your real accuracy, how long you take and where you lose marks.

Practise Supply under GSTFree diagnostic mock

More Supply under GST questions