Whether gifts to its employees considered as supply?

Under the Goods and Services Tax (GST) in India, gifts provided by an employer to its employees are considered as a supply. However, there are certain exceptions to this general rule.

As per the provisions of Schedule I of the Central Goods and Services Tax (CGST) Act, 2017, gifts given by an employer to an employee exceeding a value of Rs. 50,000 in a financial year are treated as supply. This means that if A Ltd. has made gifts to its employees worth Rs. 51,000 each, it would be considered as a supply under GST.

When gifts provided by the employer to the employees exceed the value of Rs. 50,000 in a financial year, the employer is required to account for GST on the transaction. The value of the gift exceeding Rs. 50,000 would be subject to GST at the applicable rate.

It's important to note that the value of the gift for determining the threshold of Rs. 50,000 includes the aggregate value of all gifts given by the employer to an employee in a financial year. If the total value of gifts given by the employer to an employee remains below Rs. 50,000 in a financial year, it would not be considered as a supply under GST.

It is advisable for A Ltd. to assess their GST obligations, including the registration and tax implications, in consultation with a tax professional or refer to the latest GST laws and guidelines for accurate and up-to-date information specific to their situation.