Gifts of more than Rs 50,000 in value will attract GST, the Ministry
of Finance said on Monday, raising a flag on a widespread business practice of
giving expensive gifts by companies to promote business or to compensate
employees in various ways other than their regular remuneration to evade
falling into the tax net.
Gifts of value more than Rs
50,000 made without consideration are subject to GST, when made in course or
furtherance of business. Services by an employee to the employer in the course
of or in relation to his employment is outside the scope of GST.
Service Compensation Will
not attract GST:
It is said that the
compensation received by employees from their employers in the course of their
service is not under the ambit of GST, to the extent of what has been provided
for in the contractual agreement between the both. This exemption extends to
even the housing provided by the employers to the employees, if the same is the
part of their CTC.
The move is apparently aimed to check the tax avoidance in cases
of employees being compensated in ways other than their agreed upon
remuneration to save tax at both, the hands of the employer and employees.
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