# Gifts and Perquisites — Employer to Employee
Employer-to-employee transactions sit at the intersection of Schedule-I (deemed supply between related persons) and Schedule-III (employer-employee services not a supply). Specific rules govern gifts.
## Gift Threshold — ₹ 50,000 per Employee per Financial Year
| Value of Gifts in a FY | Treatment |
|---|---|
| Up to ₹ 50,000 | Not treated as supply |
| More than ₹ 50,000 | Treated as supply under Schedule-I Para (2) — only if business asset on which ITC was availed is gifted; otherwise not a supply |
## Perquisites vs Gifts
Any perquisite or incentive provided as per the employment contract is not a gift:
- Production bonus, sales bonus etc. given under contract → not a gift, hence outside the Schedule-I gift carve-out.
- These are part of services in the employer-employee relationship → covered under Schedule-III (not a supply).
## Practical Rule of Thumb
- Contractual perquisite → Schedule-III → Not a supply (regardless of value).
- Voluntary gift up to ₹ 50,000/year → Not a supply.
- Voluntary gift above ₹ 50,000 → Supply only if business asset with ITC.