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Gifts upto Rs. 50,000 from employer to employee exempted from GST

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GST on gifts

SHIMLA– Gifts and perquisites supplied by companies to their employees will be taxed under Goods Service Tax, informed the Finance Ministry of India. The slab for exemption has been decided at Rs 50,000 per year. In simple words gifts upto Rs. 50,000 per year from an employer to his employee will be outside the ambit of GST. However, gifts of value more than Rs 50,000 made without consideration will be subject to GST, when made in the course or furtherance of business, said the statement released by Ministry.

What Constitutes a Gift?

Gift has not been defined in the GST law. In common parlance, gift is made without consideration, is voluntary in nature and is made occasionally. “It cannot be demanded as a matter of right by the employee and the employee cannot move a court of law for obtaining a gift”, said the ministry.

Taxation of Perquisites

Another issue is the taxation of perquisites. Services by an employee to the employer in the course of or in relation to his employment are outside the scope of GST (neither supply of goods or supply of services).
The supply by the employer to the employee in terms of contractual agreement entered into between the employer and the employee will not be subjected to GST.

Further, the Input Tax Credit (ITC) Scheme under GST does not allow ITC of membership of a club, health and fitness centre [section 17 (5) (b) (ii)].

If such services are provided free of charge to all the employees by the employer then the same will not be subjected to GST, provided appropriate GST was paid when procured by the employer.

The same would hold true for free housing to the employees, when the same is provided in terms of the contract between the employer and employee and is part and parcel of the cost-to-company (C2C).

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Misc News/Press Release

23rd GST Council Meeting: Detailed list of 178 items that’ll be cheaper now

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GST reduced in 23 gst council meeting

However, for luxury, sin, whitegoods, paints, cement, washing machine, air conditioners etc. will still have to follow 28 per cent slab.

New Delhi: The GST Council on Friday cut tax rates on about 173 consumer items. Now, only 50 items remain under the 28 percent slab.

The decision was taken at the 23rd meeting of the GST Council held at Guwahati on November 10, 2017.

While addressing a press conference after the meeting, the Finance Minister Arun Jately informed that earlier, 227 items lied in the 28 per cent slab. Now all types of chewing gum, chocolates, preparation for women cosmetics, shaving and after-shave items, deodorants, washing powder detergent, granite, marble, fire extinguisher, watches, blade, stove, and mattress have been put in the 18 per cent category. 

Scroll Down to Read Detailed List of Items and Their Respective Rates 

However, for luxury, sin, whitegoods, paints, cement, washing machine, air conditioners etc. will still have to follow 28 per cent slab.

Now, eating out will also become cheaper as rate for restaurant, who don’t claim tax credit (including ac/non ac), was decided at flat 5%.

The rate of outdoor catering and for hotels below Rs 7,500 room was fixed at 18% and 5% respectively

GST rate on fly ash and fly ash brick was slashed from 18 to 5 per cent and 18 to12 percent on pasta, jute and cotton handbags.

The threshold for composition scheme was hiked to Rs 1.5 crore.

As per the details given in the press conference, during last three the implementation of GST caused loss of around Rs 60,000 crore to the Centre and Rs 30,000 crore to states.

Further, it was decided in the meeting that all taxpayers would have file return in FORM GSTR-3B along with payment of tax by 20th of the succeeding month till March, 2018.

October 2017 onwards, the amount of late fee payable by a taxpayer whose tax liability for that month was ‘NIL’will be Rs. 20/- per day instead of Rs. 200/- per day.

In an earlier meeting of the GST Council, it was decided to exempt those service providers whose annual aggregate turnover is less than Rs. 20 lakhs (Rs. 10 lakhs in special category states except J & K) from obtaining registration even if they are making inter-State taxable supplies of services.

As a further measure, it has been decided to exempt such suppliers providing services through an e-commerce platform from obtaining compulsory registration provided their aggregate turnover does not exceed twenty lakh rupees.

All service providers, whether supplying intra-State, inter-State or through e-commerce operator, will be exempt from obtaining GST registration, provided their aggregate turnover does not exceed Rs. 20 lakhs (Rs. 10 lakhs in special category States except J & K).

 

Goods on which the Council has recommended reduction in GST rate from 28% to 18% include:

  • Wire, cables, insulated conductors, electrical insulators, electrical plugs, switches, sockets, fuses, relays, electrical connectors
  • Electrical boards, panels, consoles, cabinets etc for electric control or distribution
  • Particle/fibre boards and ply wood. Article of wood, wooden frame, paving block
  • Furniture, mattress, bedding and similar furnishing
  • Trunk, suitcase, vanity cases, brief cases, travelling bags and other hand bags, cases
  • Detergents, washing and cleaning preparations
  • Liquid or cream for washing the skin
  • Shampoos; Hair cream, Hair dyes (natural, herbal or synthetic) and similar other goods; henna powder or paste, not mixed with any other ingredient;
  • Pre-shave, shaving or after-shave preparations, personal deodorants, bath preparations, perfumery, cosmetic or toilet preparations, room deodorisers
  • Perfumes and toilet waters
  • Beauty or make-up preparations
  • Fans, pumps, compressors
  • Lamp and light fitting
  • Primary cell and primary batteries
  • Sanitary ware and parts thereof of all kind
  • Articles of plastic, floor covering, baths, shower, sinks, washbasins, seats, sanitary ware of plastic
  • Slabs of marbles and granite
  • Goods of marble and granite such as tiles
  • Ceramic tiles of all kinds
  • Miscellaneous articles such as vacuum flasks, lighters,
  • Wrist watches, clocks, watch movement, watch cases, straps, parts
  • Article of apparel & clothing accessories of leather, guts, furskin, artificial fur and other articles such as saddlery and harness for any animal
  • Articles of cutlery, stoves, cookers and similar non electric domestic appliances
  • Razor and razor blades
  • Multi-functional printers, cartridges
  • Office or desk equipment
  • Door, windows and frames of aluminium.
  • Articles of plaster such as board, sheet,
  • Articles of cement or concrete or stone and artificial stone,
  • Articles of asphalt or slate,
  • Articles of mica
  • Ceramic flooring blocks, pipes, conduit, pipe fitting
  • Wall paper and wall covering
  • Glass of all kinds and articles thereof such as mirror, safety glass, sheets, glassware
  • Electrical, electronic weighing machinery
  • Fire extinguishers and fire extinguishing charge
  • Fork lifts, lifting and handling equipment,
  • Bull dozers, excavators, loaders, road rollers,
  • Earth moving and levelling machinery,
  • Escalators,
  • Cooling towers, pressure vessels, reactors
  •   Crankshaft for sewing machine, tailor’s dummies, bearing housings, gears and gearing; ball or roller screws; gaskets
  • Electrical apparatus for radio and television broadcasting
  •  Sound recording or reproducing apparatus
  • Signalling, safety or traffic control equipment for transports
  • Physical exercise equipment, festival and carnival equipment, swings, shooting galleries, roundabouts, gymnastic and athletic equipment
  • All musical instruments and their parts
  • Artificial flowers, foliage and artificial fruits
  • Explosive, anti-knocking preparation, fireworks
  • Cocoa butter, fat, oil powder,
  • Extract, essence ad concentrates of coffee, miscellaneous food preparations
  • Chocolates, Chewing gum / bubble gum
  • Malt extract and food preparations of flour, groats, meal, starch or malt extract
  • Waffles and wafers coated with chocolate or containing chocolate
  • Rubber tubes and miscellaneous articles of rubber
  • Goggles, binoculars, telescope,
  • Cinematographic cameras and projectors, image projector,
  • Microscope, specified laboratory equipment, specified scientific equipment such as for meteorology, hydrology, oceanography, geology
  • Solvent, thinners, hydraulic fluids, anti-freezing preparation

b) Goods on which the Council has recommended reduction in GST rate from 28% to 12% are:

  • Wet grinders consisting of stone as grinder
  • Tanks and other armoured fighting vehicles

 Other changes/rationalisation of GST rates on goods:

  1. a) 18% to 12%
  • Condensed milk
  • Refined sugar and sugar cubes
  • Pasta
  • Curry paste, mayonnaise and salad dressings, mixed condiments and mixed seasoning
  • Diabetic food
  • Medicinal grade oxygen
  • Printing ink
  • Hand bags and shopping bags of jute and cotton
  • Hats (knitted or crocheted)
  • Parts of specified agricultural, horticultural, forestry, harvesting or threshing machinery
  • Specified parts of sewing machine
  • Spectacles frames
  • Furniture wholly made of bamboo or cane

b) 18% to 5%

  • Puffed rice chikki, peanut chikki, sesame chikki, revdi, tilrevdi, khaza, kazuali, groundnut sweets gatta, kuliya
  • Flour of potatoes put up in unit container bearing a brand name
  • Chutney powder
  • Fly ash
  • Sulphur recovered in refining of crude
  • Fly ash aggregate with 90% or more fly ash content

c) 12% to 5%

  • Desiccated coconut
  • Narrow woven fabric including cotton newar [with no refund of unutilised input tax credit]
  • Idli, dosa batter
  • Finished leather, chamois and composition leather
  • Coir cordage and ropes, jute twine, coir products
  • Fishing net and fishing hooks
  • Worn clothing
  • Fly ash brick

d) 5% to nil

  • Guar meal
  • Hop cone (other than grounded, powdered or in pellet form)
  • Certain dried vegetables such as sweet potatoes, maniac
  • Unworked coconut shell
  • Fish frozen or dried (not put up in unit container bearing a brand name)
  • Khandsari sugar

e) Miscellaneous

  • GST rates on aircraft engines from 28%/18% to 5%, aircraft tyres from 28% to 5% and aircraft seats from 28% to 5%.
  • GST rate on bangles of lac/shellac from 3% GST rate to Nil.

 

 

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