Employee gifting · The ₹15,000 exemption
From 1 April 2026 the tax-free limit on employer-provided gifts and vouchers rose from ₹5,000 to ₹15,000 per employee per year. That changes what a recognition program can be.
The perquisite value of gifts, vouchers and tokens given by an employer is treated as nil where the aggregate stays within the annual limit. That limit sat at ₹5,000 under Rule 3(7)(iv) of the Income Tax Rules 1962 for many years.
The Income Tax Rules 2026, in force from 1 April 2026, raised it to ₹15,000 and renumbered it: the provision to quote now is Rule 15(5)(a), Table IV. For FY 2025–26, which ended 31 March 2026, the old ₹5,000 limit still applied — so the two years are not comparable and any policy written before April needs revisiting.
| Tax year | Annual exemption |
|---|---|
| FY 2025–26 and earlier | ₹5,000 |
| FY 2026–27 onward | ₹15,000 |
Where the aggregate crosses the limit, some advisors read the rule as taxing only the excess and others as taxing the entire amount. The conservative position is to assume the whole value becomes a taxable perquisite, and to track cumulatively so you never find out which reading your assessing officer prefers. Ask your CA how they read it before you design around the boundary.
At ₹5,000 a year, the exemption was barely worth structuring — one Diwali voucher and you were done. At ₹15,000 you can run a genuine year-round recognition program entirely inside the tax-free band: a festive gift, a work anniversary, two or three spot awards, all delivered as vouchers, all costing the employee nothing in tax.
The constraint is no longer the limit. It is knowing where each employee stands against it in November when a manager wants to issue a spot award.
Illustrative. A manager raising a spot award in November sees this before issuing.
General guidance, not tax advice.
One register, one approval flow, one ledger entry — whether it is a Diwali round for two thousand people or a single spot award.