Can a company distribute gold coins to its employees as bonus, can same be claime as expense under income tax, can input credit of same be taken, also will it be taxable in hands of employees

Reply—Bonus given to employees can be claimed as expenses under Income tax act. If it is of the nature of bonus then it will be taxable under Income from salary head. If it is gift then the provisions of section 56 will be applicable.

As per section 56(2)(x) of Income Tax Act, 1961, where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017  any property, other than immovable property like gold without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, taxable under income from other source as gift.

Therefore, If the fair market value of gold coin exceeds Rs. 50,000/-, it will be taxable in hands of emplyee under income from other source. 

As per section 17(5) (h) of the CGST Act, ITC is disallowed on ‘goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples’. It is a general view that gold coins distributed by way of gift should be disallowed under section 17(5) (h) of the CGST Act.