XYZ Ltd. registered under GST  and distributes gifts to its employees on the occasion of Diwali for:

i) Rs 30,000/-
ii) Rs 2,50,000/-

Determine its taxability under GST? What will be the situation if gifts are given to Relatives?


 Schedule I of CGST Act:

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.

In view of above proviso gifts for Rs 30000/- given to employees does not constitute supply whereas in second case value of gifts exceeds Rs 50000/- , therefore it will liable to GST.

However there is no any exemption given in case of relatives, therefore XYZ ltd. Is liable to pay GST in both cases if gifts are given to relatives as it is considered as supply even if value is less than Rs 50000/-.