Definition of Gifts under GST 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. Impact of GST on gifts •The government has said gifts of value of up to Rs 50,000 given by an employer to its employee are outside the ambit of GST. Perquisites such as membership of a club or health and fitness centre provided free of charge to all employees by an employer will not be subject to GST if they are part of the employment contract and appropriate GST was paid when these services were procured by the employer. •Additionally, free membership of clubs, health and fitness centres are also outside the GST purview. It is pertinent to point out that the services by an employee to the employer in the course of or in relation to his employment is outside the scope of GST (neither supply of goods or supply of services), the government said in a statement. •Similarly, free housing to the employees will also be exempt from the GST if it is provided in terms of the contract between the employer and employee and is part of the cost-to-company (C2C). Input tax credit The input tax credit scheme under GST does not allow ITC of membership of a club, health and fitness centre. Therefore, 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. Perquisites The GST rate applicable on perquisites beyond those mentioned in the employment contract for senior executives and gift items worth over Rs 50,000 could fall between 18 per cent to 43 per cent. SCHEDULE I [Section 7] Activities to be treated as supply even if made without consideration Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business: Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both SCHEDULE II [Section 7] ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES. Transfer of business assets - Clause (b) - where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services.

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