{"id":14450,"date":"2020-10-20T17:02:14","date_gmt":"2020-10-20T11:32:14","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=14450"},"modified":"2021-03-23T15:06:49","modified_gmt":"2021-03-23T09:36:49","slug":"goods-and-service-tax-meaning-and-its-impact-on-diwali-gifts","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/goods-and-service-tax-meaning-and-its-impact-on-diwali-gifts\/","title":{"rendered":"Goods and Service Tax: Meaning and Its Impact on Diwali Gifts"},"content":{"rendered":"\n<p class=\"has-drop-cap\">On 29<sup>th<\/sup> March, 2017 Parliament passed an act with the concept of \u201cOne Nation, One Act\u201d. This was termed as \u201cGoods and Services Tax\u201d which further into effect on 1<sup>st<\/sup> July, 2017. GST is an amalgamation of various Central as well as State taxes into a single tax. It is considered to be a comprehension of thirteen different taxes such as Excise Duty, Sale Tax, Entry Tax, Service Tax and so on. In this article we described about Goods and Service Tax: Meaning and Its Impact on Diwali Gifts.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3aa350a41b1\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3aa350a41b1\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/goods-and-service-tax-meaning-and-its-impact-on-diwali-gifts\/#Meaning_of_GST_in_India\" title=\"Meaning of GST in India\">Meaning of GST in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/goods-and-service-tax-meaning-and-its-impact-on-diwali-gifts\/#Objective_of_Goods_and_Service_Tax\" title=\"Objective of Goods and Service\nTax\">Objective of Goods and Service\nTax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/goods-and-service-tax-meaning-and-its-impact-on-diwali-gifts\/#Meaning_of_%E2%80%9CGift%E2%80%9D\" title=\"Meaning of \u201cGift\u201d\">Meaning of \u201cGift\u201d<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/goods-and-service-tax-meaning-and-its-impact-on-diwali-gifts\/#Input_Tax_Credit\" title=\"Input\nTax Credit\">Input\nTax Credit<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/goods-and-service-tax-meaning-and-its-impact-on-diwali-gifts\/#Who_can_apply_for_ITC\" title=\"Who can apply for ITC?\">Who can apply for ITC?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/goods-and-service-tax-meaning-and-its-impact-on-diwali-gifts\/#Impact_of_GST_on_Diwali_Gifts\" title=\"Impact of GST on Diwali Gifts\">Impact of GST on Diwali Gifts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/goods-and-service-tax-meaning-and-its-impact-on-diwali-gifts\/#Tax_on_Anything_Paid_Other_Than_Salary\" title=\"Tax on Anything Paid Other Than\nSalary\">Tax on Anything Paid Other Than\nSalary<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/learning\/goods-and-service-tax-meaning-and-its-impact-on-diwali-gifts\/#Yearly_Bonus\" title=\"Yearly Bonus\">Yearly Bonus<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/learning\/goods-and-service-tax-meaning-and-its-impact-on-diwali-gifts\/#Diwali_Gifts_to_Business_Clients\" title=\"Diwali Gifts to Business\nClients\">Diwali Gifts to Business\nClients<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/learning\/goods-and-service-tax-meaning-and-its-impact-on-diwali-gifts\/#Gift_Vouchers\" title=\"Gift Vouchers\">Gift Vouchers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/swaritadvisors.com\/learning\/goods-and-service-tax-meaning-and-its-impact-on-diwali-gifts\/#Promotional_Goods\" title=\"Promotional Goods\">Promotional Goods<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/swaritadvisors.com\/learning\/goods-and-service-tax-meaning-and-its-impact-on-diwali-gifts\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Meaning_of_GST_in_India\"><\/span>Meaning of GST in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>GST\nor Goods and Service Tax is an indirect tax levied on the supply of goods and\nservices. In India, GST is a comprehensive and multilevel tax levied on every\nvalue addition. It is an indirect tax which is paid by the consumers to the\ngovernment. However, this tax is levied on the manufacturer or by the seller or\nthe businessman along with the providers of the services.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Objective_of_Goods_and_Service_Tax\"><\/span>Objective of Goods and Service\nTax<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" loading=\"lazy\" width=\"1000\" height=\"575\" src=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Objectives-of-GST.jpg\" alt=\"GST Objective\" class=\"wp-image-14451\" srcset=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Objectives-of-GST.jpg 1000w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Objectives-of-GST-300x173.jpg 300w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Objectives-of-GST-768x442.jpg 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/figure>\n\n\n\n<p>Following are some of\nthe objective laid down of Goods and Service Tax:<\/p>\n\n\n\n<ul><li>It helps in removing the effects of fall in production and distribution of cost of goods and services.<\/li><li>It helps in the increase of GDP along with the economy of the country.<\/li><li>This tax would be beneficial for both the manufacturers as well as the consumer as it would remove all the indirect taxes which they need to pay.<\/li><li><strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/swaritadvisors.com\/gst-registration\">Online GST registration<\/a><\/span><\/strong> would help in recovering from the fall in the existing VAT system which, would be beneficial for the economy of the country.<\/li><li>It helps in the enhancement of cooperative federalism.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Meaning_of_%E2%80%9CGift%E2%80%9D\"><\/span>Meaning of \u201cGift\u201d<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nterm gift has not been specifically defined under Goods and Service Tax.\nHowever, the same has been mentioned under <strong>Section\n2(xii)<\/strong> of <strong>Gift Tax Act<\/strong>.<sup><a href=\"https:\/\/indiankanoon.org\/doc\/143185911\/\"><strong><em>[1]<\/em><\/strong><\/a><\/sup><\/p>\n\n\n\n<p>\u201cGift\u201d means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money\u2019s worth.<\/p>\n\n\n\n<p>Thus, it can be said that the gift is a form of a\ngratuity made by one person to another and thus require no form of\nconsideration. Further, it is considered to be important that there should not\nbe any contractual obligation for anything to be considered as a \u201cgift\u201d.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Input_Tax_Credit\"><\/span>Input\nTax Credit<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Input\nTax Credit or ITC is a kind of tax which is paid by the consumer on the\npurchase of any goods or services. It further means that at the time of payment\nof an output tax, the consumer can reduce the tax already paid on inputs and\nthen pay the remaining amount.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_can_apply_for_ITC\"><\/span>Who can apply for ITC?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>ITC\ncan be applied by any such person who is registered under GST and fulfils all\nof the following conditions:<\/p>\n\n\n\n<p>a. The dealer must be\nin possession of tax invoice,<\/p>\n\n\n\n<p>b. The goods or services\nprovided should have been received by the consumer,<\/p>\n\n\n\n<p>c. Filing of Returns.<\/p>\n\n\n\n<p>d. Supplier must pay the tax charge to the government.<\/p>\n\n\n\n<p>e. In case depreciation\nhas been claimed of a capital good, no input tax credit should be allowed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Impact_of_GST_on_Diwali_Gifts\"><\/span>Impact of GST on Diwali Gifts<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Even after the Impact on Diwali Gifts of the global pandemic, the Indian economy is trying hard to overcome the shortcomings of it. India is in full preparation for the upcoming festivities one of which includes the festival of lights, Diwali. The tradition of gifting each other is at its peak during this time of the year. Every employer is entitled to gift anything to its employee during this season.<\/p>\n\n\n\n<p>As per the Goods and Service Tax law, if an employer gifts an employee a gift exceeding the amount of 50,000 Indian Rupees, then such gifts should be held liable under GST in India. Thus, if an employer is gifting anything luxury like card, gold coins, etc., to an employee and the amount exceeds the limitation then such gifts are to be held liable under GST in India.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Tax_on_Anything_Paid_Other_Than_Salary\"><\/span>Tax on Anything Paid Other Than\nSalary<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Many diamond merchants or gold merchants during the festive season gifts their employee various luxury gifts such as luxury cars, gold coins, companies, cash, etc., which costs more than Rs 50,000. Such gifts from an employer to an employee shall be held liable under the Goods and Service Tax law. However, the same can be avoided if the gift is given as a part of the employees\u2019 salary. It means no GST shall be levied on the same.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Yearly_Bonus\"><\/span>Yearly Bonus<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nquestion which further arises is whether a yearly bonus is considered to be a\npart of GST or not.<\/p>\n\n\n\n<ul><li>In case if the bonus is provided as a\npart of the salary and the same salary amount was earlier mentioned in the\nletter of employment, then such bonus being provided will not attract any GST.<\/li><li>However, if the bonus is provided other\nthan the salary amount and is not mentioned in the letter of employment then in\nsuch cases, GST shall be applicable.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Diwali_Gifts_to_Business_Clients\"><\/span>Diwali Gifts to Business\nClients<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Any gift provided on the occasion of Diwali to the clients does not constitute to the promotion of business. Rather, it would help in maintaining a cordial relationship between both parties. Thus, since there is no involvement of any contractual obligation these will fall under the definition of the gift as mentioned in the Act. Therefore, ITC on such gifts will be reversed as per <strong>section 17(5)<\/strong> of the <strong>CGST Act<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Gift_Vouchers\"><\/span>Gift Vouchers<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As\nper this, the retailer provides various vouchers as a scheme of doing business and\nattracting customers. These vouchers are to be used for making payment on the next\npurchase of any goods or services. Thus, in this condition, GST is to be\napplied only on the full value of payment.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Promotional_Goods\"><\/span>Promotional Goods<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Promotional\ngoods are those goods which are provided to the customers without any\nconsideration or contractual obligation. Hence, these goods will be eligible to\nbe covered under the definition of goods as per the CGST Act; hence ITC should\nbe reversed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Thus, it can be said that enterprises or an employer should always be careful while identifying any such transactions. Impact on Diwali Gifts are something which is given voluntarily to someone in order to mend their relationship and thus should be considered out of any contractual obligations. However, in some cases gifts provided are considered under the ambit of supply while in others, it is not. Therefore, it is necessary to look for both the cases separately after taking legal provisions into consideration.<\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/types-of-gst-returns-in-india\/\">Types of GST Return in India<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>On 29th March, 2017 Parliament passed an act with the concept of \u201cOne Nation, One Act\u201d. This was termed as \u201cGoods and Services Tax\u201d which further into effect on 1st July, 2017. GST is an amalgamation of various Central as well as State taxes into a single tax. It is considered to be a comprehension [&hellip;]<\/p>\n","protected":false},"author":23,"featured_media":14452,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/14450"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=14450"}],"version-history":[{"count":11,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/14450\/revisions"}],"predecessor-version":[{"id":18332,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/14450\/revisions\/18332"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/14452"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=14450"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=14450"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=14450"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}