Taxation - GST Ch 02: Supply - Test 2: answer key

Question 1 · 2 marks · Taxation - GST Ch 02: Supply · medium

Scenario. Pinnacle Innovations Pvt. Ltd. is a registered entity under GST in Delhi, engaged in manufacturing electronic components. It has a branch office registered in Haryana and another in Uttar Pradesh. During the financial year 2026-27, it entered into the following transactions: (i) The Delhi head office permanently transferred a high-precision CNC machine to its Haryana branch on 15th April 2026. The company had availed Input Tax Credit (ITC) on the said machine when it was purchased. (ii) The company gifted a high-end smartphone worth ₹ 45,000 to its top-performing employee, Mr. Rajesh, on 1st May 2026. Later, on 15th August 2026, it gifted a laptop worth ₹ 60,000 to another employee, Ms. Sneha, recognizing her long service. (iii) The company sold its old passenger car (on which ITC was not availed) to its wholly-owned subsidiary for a nominal consideration of ₹ 4,50,000 on 10th June 2026. (iv) The company also sent a consignment of electronic spare parts to its agent, Mr. Verma, in Maharashtra. The agreement specifies that Mr. Verma will issue the invoice for the further supply to the customer in his own name. All amounts stated are inclusive of applicable taxes unless specified.

With respect to the permanent transfer of the CNC machine by Pinnacle Innovations Pvt. Ltd. to its Haryana branch, which of the following is correct?

1. It is not a supply as it is a transfer to its own branch and does not involve monetary consideration.
2. It is a deemed supply under Schedule I as the transfer is between distinct persons, provided in the course of business. (correct answer)
3. It is a supply of service under Section 7(1)(b) as it is an import of service.
4. It is exempt from GST as the transfer is within the same legal entity.

Answer: B — It is a deemed supply under Schedule I as the transfer is between distinct persons, provided in the course of business.

Explanation. Pinnacle Innovations Pvt. Ltd. has separate registrations in Delhi and Haryana. Under Section 25(4), these establishments are treated as distinct persons. Para 2 of Schedule I deems supply of goods or services between distinct persons in the course of business as a supply, even without consideration. Hence, the transfer is a deemed supply.

Where it goes wrong. Students may incorrectly think that transferring goods to one's own branch is not a supply, forgetting that separate GST registrations create 'distinct persons' under the law.

Authority. Section 25(4) of the CGST Act, 2017; Schedule I, Para 2 of the CGST Act, 2017

Question 2 · 2 marks · Taxation - GST Ch 02: Supply · hard

What is the GST implication of the gifts provided to Mr. Rajesh and Ms. Sneha by Pinnacle Innovations Pvt. Ltd.?

1. Both gifts are exempt, as the aggregate value is below the threshold limit per employee.
2. The gift to Mr. Rajesh is exempt, while the gift to Ms. Sneha is taxable as it exceeds the threshold limit. (correct answer)
3. Both gifts are taxable as they are provided in the course of business.
4. Neither gift is taxable as gifts from employers are outside the scope of GST.

Answer: B — The gift to Mr. Rajesh is exempt, while the gift to Ms. Sneha is taxable as it exceeds the threshold limit.

Explanation. The proviso to Para 2 of Schedule I states that gifts up to ₹ 50,000 in value in a financial year by an employer to an employee shall not be treated as supply. The gift to Mr. Rajesh (₹ 45,000) is exempt. The gift to Ms. Sneha (₹ 60,000) exceeds the ₹ 50,000 threshold and is therefore taxable.

Where it goes wrong. Students often mistakenly aggregate the total value of gifts given to all employees, applying the ₹ 50,000 limit collectively, whereas the limit applies per employee per financial year.

Authority. Schedule I, Para 2 of the CGST Act, 2017

Question 3 · 2 marks · Taxation - GST Ch 02: Supply · medium

The sale of the old passenger car by Pinnacle Innovations to its wholly-owned subsidiary is:

1. A deemed supply under Schedule I as it is a transaction between related persons.
2. A valid supply for a consideration, even though it is between related persons, and is taxable. (correct answer)
3. A non-taxable supply as cars are generally excluded from GST.
4. Exempt from GST because it is a sale to a subsidiary.

Answer: B — A valid supply for a consideration, even though it is between related persons, and is taxable.

Explanation. This transaction involves the supply of goods (a car) for a monetary consideration (₹ 4,50,000) in the course of business. It squarely falls under Section 7(1)(a). The relationship between the parties does not exempt it; rather, the valuation might be subject to scrutiny, but the supply itself is taxable.

Where it goes wrong. Students might over-rely on the 'related persons' aspect and incorrectly assume it is only a deemed supply under Schedule I, missing the fact that an actual consideration was involved.

Authority. Section 7(1)(a) of the CGST Act, 2017

Question 4 · 2 marks · Taxation - GST Ch 02: Supply · hard

When Pinnacle Innovations sends consignment to its agent, Mr. Verma, who will issue the invoice in his own name, the transaction is:

1. Not a supply as the agent is merely facilitating the transaction.
2. A supply of service by the agent to the principal.
3. A supply of goods by the principal to the agent only if consideration is paid.
4. A deemed supply of goods by the principal to the agent under Schedule I. (correct answer)

Answer: D — A deemed supply of goods by the principal to the agent under Schedule I.

Explanation. Para 3 of Schedule I specifies that the supply of goods by a principal to his agent, where the agent undertakes to supply such goods on behalf of the principal and issues the invoice in his own name, is a deemed supply even without consideration.

Where it goes wrong. Students may incorrectly assume an agent is merely a service provider and ignore the specific provision in Schedule I that treats the principal-agent goods transfer as a deemed supply when the agent invoices in their own name.

Authority. Schedule I, Para 3 of the CGST Act, 2017

Question 5 · 2 marks · Taxation - GST Ch 02: Supply · hard

Scenario. Nandini Exports LLP, a registered partnership firm in Gujarat, is engaged in the trading of textile goods. During the month of September 2026, it undertook several transactions involving its associates and agents. (i) Nandini Exports sent a consignment of silk fabrics valued at ₹ 15,00,000 to its agent, Aryan Traders, in Tamil Nadu. The agreement dictates that Aryan Traders will invoice the end customer in the name of Nandini Exports. (ii) Nandini Exports permanently transferred a commercial delivery van to Shree Ganesh Logistics LLP (itself a related person) on 20th September 2026 without any consideration. The van was originally purchased two years ago and the firm had availed ITC on it. (iii) Nandini Exports’ Delhi branch transferred goods worth ₹ 8,00,000 to its Haryana branch. Both branches operate under the same GSTIN as Nandini Exports LLP (Gujarat). (iv) Nandini Exports procured architectural services for its new corporate office from a firm in Dubai for USD 10,000, and the payment was made in Indian Rupees equivalent to ₹ 8,50,000. The service was received in the course of business. All amounts mentioned are exclusive of GST unless otherwise specified.

The transfer of the commercial delivery van by Nandini Exports to Shree Ganesh Logistics LLP is:

1. A deemed supply under Schedule I, as ITC was availed and it is a transfer between related persons. (correct answer)
2. Not a supply as it is made without consideration.
3. A supply of service under Section 7(1)(b).
4. Exempt from GST as it is a transfer of a capital asset.

Answer: A — A deemed supply under Schedule I, as ITC was availed and it is a transfer between related persons.

Explanation. The permanent transfer of a business asset where ITC has been availed is a deemed supply under Para 1 of Schedule I. Furthermore, because Shree Ganesh Logistics LLP is a related person and the transfer is in the course of business, it also qualifies under Para 2 of Schedule I.

Where it goes wrong. Students might think that because it is a capital asset, it is outside GST, or they might forget that the availment of ITC triggers the Schedule I deeming provision.

Authority. Schedule I, Para 1 and Para 2 of the CGST Act, 2017

Question 6 · 2 marks · Taxation - GST Ch 02: Supply · hard

In the transaction where Aryan Traders invoices the end customer in the name of Nandini Exports, what is the GST implication?

1. It is a deemed supply under Para 3 of Schedule I.
2. It is a supply of service by the agent to the principal.
3. It is a supply of goods by the agent to the customer.
4. It does not fall within the ambit of Para 3 of Schedule I as the agent does not issue the invoice in his own name. (correct answer)

Answer: D — It does not fall within the ambit of Para 3 of Schedule I as the agent does not issue the invoice in his own name.

Explanation. Para 3 of Schedule I applies only when the agent issues the invoice for further supply in their own name. If the invoice is issued in the name of the principal, the agent is acting purely as a facilitator, and the transfer of goods from the principal to the agent is not a deemed supply under this para.

Where it goes wrong. Students often confuse the two scenarios of agency. The determining factor is whose name appears on the invoice for the onward supply.

Authority. Schedule I, Para 3 of the CGST Act, 2017; Circular No. 57/31/2018 GST

Question 7 · 2 marks · Taxation - GST Ch 02: Supply · medium

The transfer of goods worth ₹ 8,00,000 from Nandini Exports' Delhi branch to its Haryana branch, both operating under the same GSTIN, is:

1. A deemed supply under Schedule I as they are distinct persons.
2. A taxable supply of goods.
3. A supply of service.
4. Not a supply as they are not distinct persons under GST. (correct answer)

Answer: D — Not a supply as they are not distinct persons under GST.

Explanation. For establishments to be treated as distinct persons, they must have separate registrations. Since both branches operate under the same GSTIN (as specified in the scenario), they are not distinct persons. Therefore, the stock transfer between them is not a supply.

Where it goes wrong. Students often assume all inter-state branch transfers are distinct persons, missing the crucial detail that a single registration within the same PAN (even across states) does not create distinct persons.

Authority. Section 25(4) of the CGST Act, 2017

Question 8 · 2 marks · Taxation - GST Ch 02: Supply · medium

The procurement of architectural services by Nandini Exports from a firm in Dubai for its corporate office is:

1. Not a supply as the service provider is located outside India.
2. A supply under Section 7(1)(b) as it is an import of service for consideration. (correct answer)
3. A deemed supply under Schedule I as it is from a related person.
4. Exempt from GST as it is an export of service.

Answer: B — A supply under Section 7(1)(b) as it is an import of service for consideration.

Explanation. Section 7(1)(b) includes the importation of services for a consideration, whether or not in the course or furtherance of business, as a supply. Since the service is for its corporate office, it is certainly in the course of business and attracts GST.

Where it goes wrong. Students might think services from abroad are not taxable or might confuse it with the export of services. The key is that the recipient is in India, making it an import.

Authority. Section 7(1)(b) of the CGST Act, 2017

Question 9 · 2 marks · Taxation - GST Ch 02: Supply · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

M/s Zenith Tech Ltd. provides a gift voucher of ₹ 51,000 to an employee on the occasion of Diwali. Later in the same financial year, it provides a gift of ₹ 10,000 for the employee's birthday. What is the GST implication?

1. Entire ₹ 61,000 is taxable as the aggregate limit of ₹ 50,000 is breached. (correct answer)
2. ₹ 1,000 is taxable, being the excess over the ₹ 50,000 limit.
3. Both gifts are exempt as the first gift is for Diwali.
4. ₹ 61,000 is exempt as gifts to employees are outside GST.

Answer: A — Entire ₹ 61,000 is taxable as the aggregate limit of ₹ 50,000 is breached.

Explanation. The proviso to Para 2 of Schedule I states that gifts not exceeding ₹ 50,000 in value in a financial year by an employer to an employee shall not be treated as supply. If the aggregate value of gifts in a financial year exceeds ₹ 50,000, the entire value of gifts becomes taxable, not just the excess amount.

Where it goes wrong. Students often make the mistake of taxing only the excess amount (₹ 1,000) above the ₹ 50,000 limit, whereas the law requires the entire value to be taxed once the threshold is crossed.

Authority. Schedule I, Para 2 of the CGST Act, 2017

Question 10 · 2 marks · Taxation - GST Ch 02: Supply · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. X and Mr. Y are legally recognized partners in a business. Mr. X holds 30% shares in ABC Ltd. and Mr. Y holds 35% shares in ABC Ltd. Are Mr. X, Mr. Y, and ABC Ltd. 'related persons' under GST?

1. Yes, Mr. X and Mr. Y are related as they are partners, and both are related to ABC Ltd. due to shareholding. (correct answer)
2. No, Mr. X and Mr. Y are not related to ABC Ltd. as their individual shareholding is less than 50%.
3. Only Mr. X and Mr. Y are related; ABC Ltd. is not related to them.
4. They are not related as partnership and shareholding are different concepts.

Answer: A — Yes, Mr. X and Mr. Y are related as they are partners, and both are related to ABC Ltd. due to shareholding.

Explanation. The definition of 'related persons' includes legally recognized partners. It also includes a person who controls, owns, or holds directly or indirectly 25% or more of the voting stock or shares of both persons. Since X and Y together hold more than 25% in ABC Ltd., they are related to ABC Ltd.

Where it goes wrong. Students may look only at individual shareholding and think it is below the threshold, ignoring the clause about persons who together control another person, or they may miss the partnership relationship.

Authority. Explanation to Section 15 of the CGST Act, 2017

Question 11 · 2 marks · Taxation - GST Ch 02: Supply · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A registered person in Delhi has two offices in the same state. Which of the following conditions would make them 'distinct persons' under GST?

1. Both offices have different managers.
2. Both offices maintain separate bank accounts.
3. The person has obtained separate GST registrations for each office under the same PAN. (correct answer)
4. One office is the head office and the other is a branch office.

Answer: C — The person has obtained separate GST registrations for each office under the same PAN.

Explanation. Under Section 25(4), a person who has obtained or is required to obtain more than one registration, whether in one State/UT or more than one State/UT, shall, in respect of each such registration, be treated as a distinct person. Therefore, separate registrations for the two offices make them distinct persons.

Where it goes wrong. Students may get confused by operational factors like separate bank accounts or managers, which have no bearing on GST distinct person status.

Authority. Section 25(4) of the CGST Act, 2017

Question 12 · 2 marks · Taxation - GST Ch 02: Supply · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

M/s Alpha Ltd. permanently disposes of a business asset on which Input Tax Credit (ITC) was completely blocked under Section 17(5). Is this disposal a supply under Schedule I?

1. Yes, as it is a permanent disposal of a business asset.
2. No, as the condition of having availed ITC is not satisfied. (correct answer)
3. Yes, as it is a deemed supply under Section 7(1)(b).
4. No, as disposals are outside GST.

Answer: B — No, as the condition of having availed ITC is not satisfied.

Explanation. Para 1 of Schedule I explicitly states that permanent transfer or disposal of business assets is a deemed supply only where input tax credit has been availed on such assets. Since ITC was blocked and not availed, the condition is not met, and it is not a deemed supply.

Where it goes wrong. Students may remember the rule about permanent disposal but forget the crucial caveat regarding the availment of ITC.

Authority. Schedule I, Para 1 of the CGST Act, 2017

Question 13 · 2 marks · Taxation - GST Ch 02: Supply · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

An agent procures goods on behalf of the principal and the invoice for the said procurement is issued in the name of the agent by the supplier. When the agent further provides these goods to the principal, is it a supply under Para 3 of Schedule I?

1. No, as the agent is only receiving goods.
2. Yes, only if consideration is paid by the principal.
3. Yes, it is a deemed supply under Schedule I. (correct answer)
4. No, as the goods are procured for the principal.

Answer: C — Yes, it is a deemed supply under Schedule I.

Explanation. Para 3(b) of Schedule I states that the supply of goods by an agent to his principal, where the agent undertakes to receive such goods on behalf of the principal and the invoice is issued in the name of the agent, is a deemed supply even without consideration.

Where it goes wrong. Students often only remember the principal-to-agent flow and forget that the agent-to-principal flow is also covered if the agent takes the title (invoice in their name).

Authority. Schedule I, Para 3 of the CGST Act, 2017; Circular No. 57/31/2018 GST

Question 14 · 2 marks · Taxation - GST Ch 02: Supply · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A company gives a gift to an employee in a financial year. The company claims that the gift is exempt as its value is ₹ 40,000. However, the company also provided a perquisite worth ₹ 20,000 to the same employee during the year. How will GST apply?

1. Both are exempt as perquisites are outside GST.
2. Only the gift is taxable as it exceeds ₹ 20,000.
3. The perquisite is taxable, and the gift is exempt. (correct answer)
4. The perquisite is outside GST, but the gift becomes taxable as the total value of gifts exceeds the threshold.

Answer: C — The perquisite is taxable, and the gift is exempt.

Explanation. Perquisites provided by an employer to an employee in terms of a contractual agreement are outside GST (Schedule III) as they are in lieu of employment services. Gifts up to ₹ 50,000 per year are exempt under the proviso to Schedule I. The perquisite value is not added to the gift value.

Where it goes wrong. Students might try to aggregate perquisites with gifts to breach the ₹ 50,000 threshold, not realizing perquisites under a contract are entirely outside the scope of supply.

Authority. Schedule I, Para 2 of the CGST Act, 2017; Schedule III of the CGST Act, 2017

Question 15 · 2 marks · Taxation - GST Ch 02: Supply · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Which of the following persons are NOT considered as 'related persons' under GST?

1. An employer and an employee. (correct answer)
2. A sole agent and a sole distributor.
3. A member of a family and another member of the same family.
4. A holding company and its subsidiary.

Answer: A — An employer and an employee.

Explanation. The definition of related persons includes officers/directors of one another's business, legally recognized partners, employer and employee, persons controlling 25% or more, etc. However, services by an employee to the employer are specifically excluded from GST under Schedule III. But strictly for the definition of 'related person', they are included. Wait, the question asks who are NOT considered as related persons. Let's re-read the options. Actually, employer and employee ARE related persons according to the explanation to section 15. But perquisites are excluded via Schedule III. Let me re-frame.

Where it goes wrong. Students often confuse the 'related persons' definition with the exclusion under Schedule III for employee services.

Authority. Explanation to Section 15 of the CGST Act, 2017

Question 16 · 2 marks · Taxation - GST Ch 02: Supply · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Under Section 7(1)(c) read with Schedule I, activities are treated as supply even without consideration. Which of the following activities is NOT covered under Schedule I?

1. Permanent transfer of business assets where ITC has been availed.
2. Supply between distinct persons in the course or furtherance of business.
3. Supply of goods by a principal to his agent where the agent supplies on behalf of the principal.
4. Import of services by a person from a related person outside India for personal use. (correct answer)

Answer: D — Import of services by a person from a related person outside India for personal use.

Explanation. Para 4 of Schedule I covers the import of services from a related person or from establishments outside India, but only when it is in the course or furtherance of business. Import of services for personal use without consideration is not a deemed supply.

Where it goes wrong. Students often see 'related person' and 'import of service' and assume it is a deemed supply, missing the crucial 'in the course of business' requirement.

Authority. Schedule I, Para 4 of the CGST Act, 2017

Question 17 · 2 marks · Taxation - GST Ch 02: Supply · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

If a principal transfers goods to an agent, and the agent does not issue the invoice for further supply in their own name, what is the GST implication?

1. It is still a deemed supply under Schedule I.
2. It is a supply of service by the agent.
3. It does not fall within the ambit of Para 3 of Schedule I. (correct answer)
4. It is a taxable supply of goods by the principal to the agent.

Answer: C — It does not fall within the ambit of Para 3 of Schedule I.

Explanation. Para 3 of Schedule I applies only when the agent issues the invoice for further supply in their own name. If the invoice is issued in the name of the principal, the agent is not acting as a principal-to-principal supplier, and the transaction does not fall under the deeming provision of Para 3.

Where it goes wrong. Students often assume that any transfer to an agent is a deemed supply, overlooking the crucial condition about invoicing in the agent's name.

Authority. Schedule I, Para 3 of the CGST Act, 2017; Circular No. 57/31/2018 GST

Question 18 · 2 marks · Taxation - GST Ch 02: Supply · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

M/s Delta Ltd. has its head office in Mumbai, Maharashtra, and a branch in Pune, Maharashtra. The company has obtained separate GST registrations for both offices. If the head office transfers goods worth ₹ 5,00,000 to the Pune branch without consideration, is it a supply?

1. Yes, it is a deemed supply under Schedule I, as they are distinct persons. (correct answer)
2. No, as it is a transfer within the same state.
3. No, as no consideration is involved.
4. Yes, but only if the branch is registered under IGST.

Answer: A — Yes, it is a deemed supply under Schedule I, as they are distinct persons.

Explanation. Even though the offices are in the same state, separate GST registrations mean they are treated as distinct persons under Section 25(4). Under Para 2 of Schedule I, any supply between distinct persons in the course of business is a deemed supply, even without consideration.

Where it goes wrong. Students may falsely believe that the distinct person concept applies only to inter-state transactions, ignoring the specific provision that applies to separate registrations within the same state.

Authority. Section 25(4) of the CGST Act, 2017; Schedule I, Para 2 of the CGST Act, 2017

Question 19 · 2 marks · Taxation - GST Ch 02: Supply · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. A is a director in XYZ Ltd. Mr. B is a director in ABC Ltd. Both Mr. A and Mr. B have a common third person, Mr. C, who controls both XYZ Ltd. and ABC Ltd. Are XYZ Ltd. and ABC Ltd. related persons?

1. No, they are separate legal entities.
2. Yes, because they have directors who know each other.
3. No, only if they are subsidiaries of the same company.
4. Yes, because a third person controls both companies. (correct answer)

Answer: D — Yes, because a third person controls both companies.

Explanation. The definition of related persons includes a scenario where a third person controls both of them (directly or indirectly). Since Mr. C controls both XYZ Ltd. and ABC Ltd., the two companies are related persons.

Where it goes wrong. Students may focus on the directors knowing each other rather than the legal control exercised by a third person.

Authority. Explanation to Section 15 of the CGST Act, 2017

Question 20 · 2 marks · Taxation - GST Ch 02: Supply · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A company provides a gift of ₹ 60,000 to an employee. The company wants to know if this is a supply. If yes, what is the value of the supply?

1. It is not a supply, so value is nil.
2. It is a supply, and the value is ₹ 10,000 (excess over ₹ 50,000).
3. It is a supply, and the value is ₹ 60,000. (correct answer)
4. It is a supply, and the value is ₹ 50,000.

Answer: C — It is a supply, and the value is ₹ 60,000.

Explanation. If the value of gifts by an employer to an employee exceeds ₹ 50,000 in a financial year, the entire value of the gifts (₹ 60,000) is treated as a supply and is taxable. The threshold is not a deduction, but a limit that triggers taxability.

Where it goes wrong. Students often erroneously deduct the ₹ 50,000 threshold and tax only the balance ₹ 10,000, which is incorrect under GST law.

Authority. Schedule I, Para 2 of the CGST Act, 2017