Hi,
If the company decides to give gold coins to its select employees as part of a bonus or appreciation drive, then who would be taxed - the employee or the company? For example, Mr. X, for his good performance, is awarded 4 gold coins of 99.9% purity from HDFC Bank.
Now, if Mr. X decides not to sell the gold coins or convert them into jewelry, would the receipt of gold coins be taxed in his gross income from a tax point of view? If so, at what rate?
Additionally, how would an appreciation or loyalty bonus be taxed for the employee, and how can they minimize the tax impact?
Please respond.
Much obliged,
Roshini Arya
From India, Jalandhar
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If the company decides to give gold coins to its select employees as part of a bonus or appreciation drive, then who would be taxed - the employee or the company? For example, Mr. X, for his good performance, is awarded 4 gold coins of 99.9% purity from HDFC Bank.
Now, if Mr. X decides not to sell the gold coins or convert them into jewelry, would the receipt of gold coins be taxed in his gross income from a tax point of view? If so, at what rate?
Additionally, how would an appreciation or loyalty bonus be taxed for the employee, and how can they minimize the tax impact?
Please respond.
Much obliged,
Roshini Arya
From India, Jalandhar
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Hello Roshini,
1) If an employee shows that they received the gift from the company, then he/she can avail the tax-free benefits if it is below 50k; above 50k counts as taxable income. In the future, when he or she sells the gold, it will be considered as a capital gain or loss, and the capital of the previous year will be counted based on the index number.
2) If an employee received gold against his bonus amount, then there are no questions; gold is equal to the bonus amount. Please confirm this with a finance/accounts expert.
Thank you,
Ashish
From India, Pune
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1761) If an employee shows that they received the gift from the company, then he/she can avail the tax-free benefits if it is below 50k; above 50k counts as taxable income. In the future, when he or she sells the gold, it will be considered as a capital gain or loss, and the capital of the previous year will be counted based on the index number.
2) If an employee received gold against his bonus amount, then there are no questions; gold is equal to the bonus amount. Please confirm this with a finance/accounts expert.
Thank you,
Ashish
From India, Pune
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Hi, If employee receive the gifts from the management (i.e. Dewali Gifts, New year gifts etc.,) that one is tax exempted as per Income Tax Act. Srini
From India, Hyderabad
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From India, Hyderabad
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Many thanks for your response. I just have an addition to be made. As you have correctly mentioned, a gift up to 50K is not taxable. Can the company, as per law, give a gift to the spouse of the employee or parent?
XYZ Ltd wants to give a gift of Rs 150,000 to employee Mr. A for his good performance. Mr. A is an employee of XYZ Corp and receives a gift of Rs 50,000, which is tax-exempt. The wife of Mr. A, Mrs. A, is given a gift of Rs 50,000 (she is a housewife with no income and files NIL returns). Additionally, the parents of Mr. A are given a gift of Rs 50,000 (parents are senior citizens and also file NIL returns).
Will the tax authority have an issue with this? What will be the positive and negative aspects for the company XYZ Ltd? Please clarify, and I shall be much obliged.
Regards,
Roshini
From India, Jalandhar
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XYZ Ltd wants to give a gift of Rs 150,000 to employee Mr. A for his good performance. Mr. A is an employee of XYZ Corp and receives a gift of Rs 50,000, which is tax-exempt. The wife of Mr. A, Mrs. A, is given a gift of Rs 50,000 (she is a housewife with no income and files NIL returns). Additionally, the parents of Mr. A are given a gift of Rs 50,000 (parents are senior citizens and also file NIL returns).
Will the tax authority have an issue with this? What will be the positive and negative aspects for the company XYZ Ltd? Please clarify, and I shall be much obliged.
Regards,
Roshini
From India, Jalandhar
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