The finance ministry on Monday clarified that there will be no goods and services tax (GST) for gifts worth Rs 50,000 per year from an employer to their employees.
However, gifts of value more than Rs 50,000 made without consideration are subject to GST, when made in course or furtherance of business, according to an official statement from the ministry.
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.
The services by an employee to the employer in the course of or in relation to his employment is outside the scope of GST . Further, the input tax credit (ITC) scheme under GST does not allow ITC of membership of a club, health and fitness centre. 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), the statement added.
In another event, finance minister Arun Jaitley launched a new tax payer service module 'Aaykar Setu'.
This e-initiative would help in reducing physical interface between assesses and tax assessing authorities and minimise chances of any tax harassment, he said.
The new step is an effort by the income tax department (ITD) to directly communicate with the taxpayers, on a range of multiple informative and useful tax services aimed at providing tax information at their fingertips.
The module compiles various tax tools, live chat facility, dynamic updates, and important links to various processes within the ITD. The tax payers will also be able to receive regular updates regarding important tax dates, forms and notifications on mobile numbers registered with the ITD.
All taxpayers who wish to receive such SMS alerts are advised to register their mobile numbers in the Aaykar Setu module.
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