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Business promotion expenses

A/c entries 4822 views 4 replies

Sujit Kumar Sahoo

audit assistance

56 Points Posted on 10 December 2018

Dear Sir,

We are a Private Limited Company who is manufacturing steel pipes.We want to gift a new bike for our one marketing staff. We want to puchase the same bike in his Individual name not our company name because our company do not want to take any risk if any accident or theft occured.The money of total cost will be transferred from our company to the showroom where Motor Bike will be purchased. My question is what is the entry pass in tally whether it is the business promotion expenses or staff welfare.Can we take GST input in that purchase ?

Replies (4)

Quick Summary

Company giving a bike to marketing staff is treated as staff welfare/gift expense. It may be considered supply to employee under GST. If value exceeds INR 50,000, GST applies and ITC is not allowed. Generally booked as staff welfare expense in Tally, not business promotion.

Jatin

Accountant

3479 Points Posted on 10 December 2018

1) Staff Welfare

2) No ITC

Poonam

Ca firm

22 Points Posted on 10 December 2018

Staff Welfare

Z

Tax Consultation (US and India)

2970 Points Posted on 11 December 2018

Although staff welfare, it is in the nature of a gift.

For an employer, an employee is a related person, and therefore it will be considered as a supply by the employer.[Schedule 1 para 2]

However, if the value of this gift is up to INR 50,000, then it shall not be treated as a supply.

If the value exceeds 50,000, then GST would be applicable, and you won't be able to take it's credit either.

Z

Tax Consultation (US and India)

2970 Points Posted on 11 December 2018

Kindly note: if the expense is not covered by the terms of employment, then it would be considered as a gift because a gift is made without consideration, is voluntary in nature and is made occasionally. It can not be demanded as a matter of right by the employee and the employee can not move a court of law for obtaining it,