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Gst on gift to employee

19 December 2018

Applicability of gst on car given to employee as gift ( ₹ 1500000 each)
in terms of schedule l and availability of ITC to Employer on gst paid on purchase.

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15 Replies

RAJA P M ("Do the Right Thing...!!!") (127227 Points)
Replied 19 December 2018

No... No...

ITC not available...!!!

pritesh (CA Final student) (7101 Points)
Replied 19 December 2018

If gift value is more than 50k i will be treated as supply on that you have to pay tax and you can claim ITC

according to me pls confirm from others.

RAJA P M ("Do the Right Thing...!!!") (127227 Points)
Replied 20 December 2018

I think "The Query based on GST ITC. Not under Income Tax".

CA Jagadeeshwar Kokolla (Practicing Chartered Accountant) (67 Points)
Replied 20 December 2018

ITC would not be eligible on the same. At the same time there would not be any tax liability on the Gift portion, if planned properly.

Shivam RC (Student) (23683 Points)
Replied 20 December 2018

GST would be applicable on Car gifted by the employer to his employee as the value of the Gift exceeds the prescribed limit of Rs.50,000 as laid down in SCHEDULE I of the CGST Act 2017.

However, the Employer will not be able to claim INPUT TAX CREDIT ( ITC ) on Motor Vehicles gifted to employees as it is specifically BLOCKED u/s 17(5) of the CGST Act 2017.

Regards.

3 Like

RAJA P M ("Do the Right Thing...!!!") (127227 Points)
Replied 20 December 2018

The "GIFT" is Exceeding above 50k then Tax Applicable based on Income Tax...

pritesh (CA Final student) (7101 Points)
Replied 20 December 2018

Dear Raja sir
50k limit also there in GST also.

Gift upto valie of 50000/- per year by the employer to his employee is outside the ambity of GST. However, GST of Value more than 50000/- made without consideration are subject to GST, when made in the course or furtherance of business.

Now the ques arises what is gift here-

Gift- “gift is one which is made without consideration, is voulantry in nature and is made occasionally. It can not be demanded as a matter of right by the employee and employee can not move a court of law for obtaining a gift”.

RAJA P M ("Do the Right Thing...!!!") (127227 Points)
Replied 20 December 2018

Yes Dear I agreed.

But, ITC...???!!!🙃

Pankaj Rawat (GST Practitioner) (55032 Points)
Replied 20 December 2018

Yes As per Schdule I , the Gift upto 50 k to Employee is exempted , hence in this case its treated as supply & GST is applicable .

and on Purchase of Same the ITC will be available , secrion 17(5) will not attract as being vehicle is purchase for sale

*Open for other Opinion

1 Like

Devendra Sujane (Student) (58 Points)
Replied 20 December 2018

Dear shivam RC sir

tax on gift is okay

but employer would not get the credit.

plz give reference of any section.

Shivam RC (Student) (23683 Points)
Replied 20 December 2018

Dear Sir There are 2 Cases in your query : CASE 1). When you purchased Car from the Dealer and paid GST thereon : In this case INPUT TAX CREDIT ( ITC ) is specifically BLOCKED u/s 17(5)(a) of the CGST Act 2017. CASE 2). When Car is being gifted to employee : Since the value of the car exceeds Rs.50,000, you have to charge GST from the employee as per SCHEDULE I and in this case also you cannot claim ITC since ITC on GIFTS is Blocked u/s 17(5)(h) of the CGST Act 2017. Regards.

Pankaj Rawat (GST Practitioner) (55032 Points)
Replied 20 December 2018

sorry for my above Reply ||| There might be 2 condition : 1.The car is Directly purchase in Name of Employee. In this candition the There will no ITC (As the bill is not in co. Name) & No GST on suppky As there is no GST on Cash paid to Car dealer by Company. 2. Condition : If car purchase in the name of Company : In this case Thats for sure that ITC will be not Available to Co. As per Section 17(5) (Regard to vehicle & Gift Clause ) Now the company Transfer the vehicle in name of Employee as Gift & per schedule I, its supply But.... As the vehicle purchase in Co. Name then being transferred to employee means its 2nd hand vehicle supply & As per Notification 8 /2018 CT (r) where there is no input being claim the Gst will be applicable on Profit margin & in this case the profit margin will Zero Hence No GST (15 lac Book value of car less Transaction value Rs 15 comes to Zero profit) Note : In 1st condition the value of car will added to income of Employee (As a perks)