Your Guide to Corporate Gift-Giving Laws in India

Corporate gifts are an excellent way to build relationships and promote your brand. But before you start sending out those branded goodies, it's important to know that corporate gifting in India comes with legal strings attached. Here’s a quick rundown of the key laws you need to be aware of:

1. Income Tax Act, 1961

Corporate gifts fall under taxation laws in India, and here's how it affects you:

• Gifts over ₹50,000 in a financial year are taxable in the hands of the receiver.

• Gifts to employees valued at ₹5,000 or less (like festival gifts) are tax-exempt. However, anything above this limit is considered a perk and taxed as part of the employee’s income.

• Gifts to clients and business partners are considered business expenses and can be claimed for tax deductions, but extravagant gifts might raise scrutiny from tax authorities.

  
  

2. GST on Corporate Gifts

Corporate gifts also come under GST regulations:

• Input Tax Credit (ITC) cannot be claimed for gifts unless they are part of a business promotion. If the gift is for marketing or promotional purposes, ITC might be allowed.

• The GST rate depends on the item you are gifting, so it’s important to account for the specific tax slab of the product.

  
  

3. Prevention of Corruption Act, 1988

Gifting to government officials can lead to complications under the Prevention of Corruption Act:

• Gifts to public officials that appear to influence their work or decisions are treated as bribes and can lead to legal action. Always ensure that gifts are modest and are not given with an intent to receive preferential treatment.

  
  

4. SEBI and Corporate Sector Guidelines

The Securities and Exchange Board of India (SEBI) recommends that companies, especially in the financial services sector, establish a Corporate Gifting Policy to ensure transparency and prevent gifts from being viewed as conflicts of interest.

Why It Matters

Corporate gifts are more than goodwill—they can attract tax liabilities or even legal trouble if not handled properly. Developing a formal Corporate Gifting Policy can help you avoid issues and ensure ethical, legal gifting.

Ready to Gift Legally?

At Gift Away, we help you deliver thoughtful gifts while staying compliant with the law. Get in touch today to explore our range of legally compliant corporate gifting solutions!