Giving gifts is rather important in Indian society. Regarding gift-giving at work, though, there are tax laws to abide by. Knowing what non taxable gifts to employees you can give employees is crucial if you run a business or are an employer. For you or them, this helps keep your team content without adding to your or their tax load.
What are gifts free from taxes?
Under Indian tax rules, non-taxable gifts to employees are those gifts free from income tax attraction. These are permitted within particular limits and under particular circumstances.
Why Would One Want Non Taxable Gifts?
- Keeps staff members inspired.
- Builds the relationship between employers and employees.
- Shows gratitude free from additional financial burden.
- Saves taxes on both sides.
Indian Tax Laws for Employee Gifts
Non taxable gifts to employees include the following salient features:
- Gifts worth up to ₹5,000 in a financial year are not liable tax.
- This covers everything from home appliances to vouchers and devices.
- Should the gift total exceed ₹5,000, the entire amount becomes taxable as perquisites under salary.
- No matter their value, cash gifts are always taxable.
Often Used Non Taxable Gift Ideas
Here are some typical and safe choices:
- Worth up to ₹5,000 yearly, gift cards
- Festive hampers (dry fruits, sweets, etc.)
- Devices akin to power banks or earphones
- Everyday objects like toasters or mixers
- Branded products (bags, bottles, etc.)
Notables to Remember
- Stay within the non taxable gifts to employees rules by avoiding giving cash.
- Record exactly who got what gift and when.
- Performance-based pay should not have gifts included.
Ideal Gift Times
- Diwali or some other celebration
- Birthdays or anniversaries for staff members
- Meeting service targets
- Appreciation at the end of the year
Thoughts on Final Notes
Giving non taxable gifts to employees is a wonderful way to honor your team without having to deal with tax complications. Just keep under the ₹ 5,000 limit and steer clear of handing cash. Thoughtful gifts show you love; smart gifting helps you save too!
