GST: Gifts by employers above Rs 50,000 under ambit of GST, tweets FinMin

Finance Ministry stated that gifts worth more than Rs 50,000 from employers to their subordinates will attract taxes under Goods and Services Tax (GST). This is to check the prevalent practice of companies giving expensive gifts to their staff to boost business or to pay their staff in ways different from regular remuneration in order to evade taxes.

The services extended by employees to their employers in course of or in relation to employment will be exempt from the scope of the new tax regime, said a tweet by the Arun Jaitley-led Finance Ministry.

A tweet on the Ministry's Twitter handle said, "Services by an employee to the employer in the course of or in relation to his employment is outside the scope of GST."

Services by an employee to the employer in the course of or in relation to his employment is outside the scope of GST.

- Ministry of Finance (@FinMinIndia) July 10, 2017

"However, gifts of value more than Rs 50,000/- made without consideration are subject to GST, when made in course or furtherance of business," said another one in a series of tweets.

However, gifts of value more than Rs 50,000/- made without consideration are subject to GST, when made in course or furtherance of business.

- Ministry of Finance (@FinMinIndia) July 10, 2017

The decision is likely to curb the practice of employees being paid in mean different than what has been agreed upon as remuneration to avoid paying taxes by both employers and employees.

Finance Ministry clarified that perks, like housing and such, provided to employees in accordance to the agreement they entered when taking the job will not be covered under GST.

"Supply by an employer to an employee in terms of contractual agreement entered into between employer and employee, will not be subjected to GST," the Ministry said in a statement.

Prime Minister Narendra Modi rolled out the Goods and Services Tax n July 1 in a bid to unite the nation as one market under a uniform indirect tax regime and neutralise the cascading effect of taxes. Earlier, the Finance Ministry had forbidden taxmen to visit shopkeepers without prior authorisation, after receiving reports of 'some unscrupulous elements posing as GST officers trying to fleece the shopkeepers and customers in the name of GST.'