Taxable Gifts from Employer: What is It

Getting a festive gift or bonus from your employer might feel like a warm gesture, but did you know it could be taxed as part of your salary? According to Indian tax laws, gifts received from an employer—whether in cash or kind—can be fully taxable under the head ‘Income from Salary’ if their total value exceeds Rs. 5,000 in a financial year.

So, before you celebrate that Diwali hamper or shopping voucher, it’s important to understand how these gifts are taxed and how you can plan your finances better.

How Are Gifts from Employers Taxed?

Under Section 17(2)(viii) of the Income Tax Act, any gift or benefit received from an employer is treated as a perquisite. If the aggregate value of all gifts in a financial year exceeds Rs. 5,000, the entire value becomes taxable, not just the excess amount.

Let’s say you received a smartwatch worth Rs. 6,000—this amount gets added to your taxable salary and is taxed according to your slab.

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Types of taxable employer gifts include:

• Cash gifts or bonuses
• Shopping vouchers or gift cards
• Gadgets and electronics
• Household items like appliances or hampers

Taxability Rules at a Glance

It’s essential to understand these nuances while filing returns or planning finances. Knowing what is tax-exempt helps maximise benefits and avoid penalties. Individuals should consult a tax advisor for personalised advice if they receive significant gifts in a financial year.

Smart Move: Convert Taxable Gifts into Income-Building Tools

Even if a gift from your employer becomes taxable, you can turn it into a financial opportunity. For example, instead of spending a bonus or voucher immediately, consider investing it in a Bajaj Finance Fixed Deposit.

With interest rates of up to 7.95% p.a., Bajaj Finance FDs help you grow your income reliably—especially after tax deductions on salary perks. It’s a great way to park taxable payouts and earn predictable returns over time. Open FD Account.

What Gifts Are Fully Tax-Exempt?

Certain gifts—especially those not received from employers—are completely exempt from tax under Section 56 of the Income Tax Act. These include:

• Gifts from relatives
• Gifts on marriage
• Inheritance or gifts through will

However, any gift received from a friend exceeding Rs. 50,000 in a financial year becomes taxable under "Income from Other Sources.

So, it is essential to maintain clear documentation and consult your Form 16 and salary slips to declare such perks accurately when filing your returns.

Conclusion

Gifts from employers may feel like a bonus, but when they push past Rs. 5,000 in value, they directly impact your taxable income. Whether it’s Diwali goodies or a milestone reward, being aware of these tax rules helps you plan better and avoid surprises.

And if you receive a taxable gift or bonus, consider securing it in a Bajaj Finance Fixed Deposit. It’s one of the safest, most efficient ways to make your post-tax income work harder for you. Check FD Rates now!

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