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Gift for completing Sales target

bikram sachdev (MANAGER) (40 Points)

25 September 2019

if I give a gift to a customer which can be if RS 1lac or RS 50000/- for completing my sales target what will be the tax implications on me or the customer

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Kapadia Pravin (17249 Points)
Replied 28 September 2019

No implications on you. You may debit to P&L as Sales promotion expenses .

For customer it will be a gift and upto 50000/- it is exempt. However if it is 1 lakh then entire amount of 1 lakh is taxable under section 56 being deemed income from other sources.

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Suresh Thiyagarajan (Student) (3986 Points)
Replied 28 September 2019

1. Any type of gift will be taxable u/s 56(2)(x) with few exceptions based on the relationship of the two parties.
2. If the monetary value of the gift exceeds Rs. 50,000 will be taxable in the hands of the recipient under the head Income from Other Sources.
3. The same will be considered as Sales promotion expenses and it will be allowed as a deduction in your P&L account.
4. If the value of the gift exceeds Rs. 50,000 entire gift will be taxable or else it will not be taxable.
Please correct me if the above solution has an alternative view.

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