GST on corporate gifts in India.

01 · The two limits

What are the corporate gifting tax limits?

There are two, and the single most common mistake is to treat them as one. GST and income tax each draw their own line around a corporate gift, at different amounts, for different reasons, and with different consequences when you cross them. Keep both on one page and the whole subject becomes manageable.

The first line is a GST line. Under Schedule I, Entry 2 of the CGST Act, gifts from an employer to an employee up to ₹50,000 per employee, per financial year are not treated as a supply. No supply means no GST. The Central Board of Indirect Taxes and Customs said as much in its press release on gifts and perquisites — a useful thing to have on file when a procurement query lands.

The second line is an income-tax line, and it sits much lower. A gift from an employer to an employee up to ₹5,000 in a yearis not treated as a taxable perquisite in the employee's hands. Above ₹5,000, the excess is a perquisite, added to the employee's salary income — while the employer, separately, can still claim the spend as a business expense.

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₹50,000 is the GST line. ₹5,000 is the perquisite line. A gift is measured against both, independently.

Procurement note · 2026

02 · How the lines behave

Why the whole gift is taxed, not just the excess.

The two lines do not behave the same way once you cross them, and that asymmetry is where budgets get caught out.

On the GST side, the ₹50,000 figure is a cliff, not a step. So long as the total value of gifts to a single employee stays at or under ₹50,000 across the financial year, none of it is a supply. The moment the cumulative value crosses ₹50,000, the whole amount is treated as a supply and becomes taxable — not merely the rupee above the line. A ₹52,000 annual gifting relationship is taxed on ₹52,000, not on ₹2,000.

On the income-tax side, the logic inverts. The ₹5,000 perquisite figure is a step, not a cliff. Only the value above ₹5,000 is a taxable perquisite in the employee's hands; the first ₹5,000 stays exempt. A ₹7,000 gift creates a ₹2,000 perquisite, not a ₹7,000 one.

• GST threshold₹50,000 per employee, per financial year. A cliff — cross it and the whole value is a supply.
• Perquisite threshold₹5,000 per employee, per year. A step — only the excess is taxable.
• Cumulative, not per-giftThe GST line is measured on the running total to one employee across the year, not on a single item.
• Employer deductionThe business expense claim on the spend is unaffected by the perquisite treatment in the employee's hands.
• Confirm the factsValuations and edge cases turn on specifics — a CA sign-off is the last step, not an optional one.

03 · Input tax credit

Can you claim ITC on corporate gifts?

This is the part that surprises finance teams most, so it is worth stating plainly: input tax credit is generally blocked on gifts. Section 17(5) of the CGST Act lists the supplies on which a business cannot claim ITC, and goods disposed of by way of gift sit squarely inside that list. Where credit has already been taken on goods that are then given away free, that credit must be reversed. ClearTax sets out the mechanics in its note on Section 17(5) and perks to employees.

The practical consequence is that GST on a gift usually stays with the company as a cost, rather than being recoverable the way input tax on ordinary business purchases is. That is precisely why the ₹50,000 no-supply threshold matters so much on employee gifts: staying within it keeps the whole question of blocked credit off the table for that relationship.

For gifts to clients and channel partners — where the ₹50,000 employee threshold does not apply — the Section 17(5) block is the provision most companies actually run into. We deliberately do not quote a client-gift threshold here, because the given, verified rules concern the employer-to-employee relationship. Your chartered accountant is the right person to map a client-gifting spend to the correct treatment.

04 · A compliant programme

How to structure the spend.

The rules reward planning. Because the GST line is cumulative and per-employee, the sensible move is to track the running value of gifts to each employee across the financial year, not to look at each occasion in isolation. A Diwali hamper, a work-anniversary piece, and a year-end token can each look modest and still cross ₹50,000 in aggregate.

Keep the documentation clean from the start. A proper GST invoice for every order, a certificate of authenticity for hallmarked silver, and a simple per-employee ledger of gift values will answer almost every question your auditor or your CA is likely to ask. If you want the fuller picture of how to run a programme end to end, our corporate gifting guide walks through briefs, budgets, and timelines, and the corporate gifting page shows what we make and how ordering works.