Corporate gifting budget in India: how much per employee?

By Anjali Bhatt, Sirius Star. Procurement and cost desk.

The budget sheet came to me on a Wednesday, two lines highlighted in yellow. A 287-person firm in Thane, planning the Diwali gift, and the HR head and the finance head had reached a standoff over one cell. HR had written Rs 2,500 a head. Finance had struck it through and written Rs 900.

Neither number was wrong. That was the problem. HR was right that a Rs 900 gift, after you take out the box and the courier, looks like an apology. Finance was right that Rs 2,500 across 287 people is a little over Rs 7 lakh, and nobody had asked where that sat in the P&L. They were arguing about the wrong figure. The right one was not on the sheet at all.

What a corporate gifting budget in India actually buys per employee

Start with what the money turns into. A gift budget is not one number, it is four: the item, the packaging, the delivery, and the tax you will not get back. On a Rs 900 head, the item is maybe Rs 550 once the box and the courier take their cut. On a Rs 2,500 head, the item is closer to Rs 1,900. The jump in what your employee actually holds is bigger than the jump in what you spend.

Rough bands we quote in India, per employee, for a festive gift. Under Rs 500 works for a token, a sweet box or one good item, when the count is large and the message is warmth. Rs 800 to Rs 1,500 is where most staff gifting sits: a small hamper or one branded thing people keep. Rs 1,500 to Rs 3,000 buys a gift that reads as considered, which is where senior and long-service names belong. Above Rs 3,000 is client and leadership territory, and it carries a tax question you answer before you sign.

The two tax lines nobody puts on the gifting quote

Here is the part your vendor will not raise, because it is not their money. Two rules decide the real cost of a corporate gift in India, and both live outside the quotation.

First, GST. Gifts to an employee up to Rs 50,000 in a financial year are not treated as a supply, so you owe no GST on the gift itself. Good. But the GST you paid when you bought the hampers is blocked. Section 17(5) of the CGST Act does not let you claim input credit on goods given away as gifts. So if your Rs 2,500 hamper carried Rs 380 of GST, that Rs 380 is a real cost, not a credit sitting on your books. Point being: your delivered per-head cost is the invoice with GST in it, because none of that GST comes back.

Second, income tax, which lands on your employee, not on you. A gift in kind is a tax-free perquisite up to a yearly limit per person. That limit sat at Rs 5,000 for years, and the Income-tax Rules for 2026 have raised it to Rs 15,000. Cross it, and the excess becomes taxable salary in your employee’s hands. A single Rs 2,500 Diwali hamper is clean. But if the same person also got a Rs 12,000 anniversary gift and a Rs 6,000 birthday voucher in the same year, you have pushed them over, and a gift has turned into a line on their payslip. Cash and gift cheques are worse still: taxable from the first rupee. Give things, not gift cheques.

A per-head framework, once you sort staff by why you are gifting

The table earns its place only after those two rules, not before. Here is the framework I gave the Thane firm, sorted by who the gift is for, not by a flat number stamped across everyone.

*Indicative India ranges, item value before GST and delivery. Thresholds are per the Income-tax Rules and the CGST Act, current for FY 2026-27, and both get revised, so confirm a large run with your CA.

Notice what the framework does. It ends the flat-number fight. HR and finance were defending one cell because the sheet forced them to. Split the budget by purpose and the argument dissolves. Roughly the same total, but now every rupee has a reason.

What I told them, and where I was wrong first

My first instinct was finance’s. Cut to Rs 900, save Rs 4.5 lakh, move on. I was wrong, and the HR head is the one who showed me why. She pulled last year’s WhatsApp thread. Half the staff had photographed the gift and sent it home to family. A Rs 900 box does not get photographed. The spend was never the cost. The forgettable gift was the cost, because a gift nobody feels is Rs 2.5 lakh of pure waste dressed up as a saving.

The other thing finance said was the line every buyer says. Your Diwali gifting quote is higher than the guy in Crawford Market. It is higher, and here is what the extra buys: GST-compliant invoicing your auditor will not query, pan-India delivery that actually arrives, and a replacement guarantee when six boxes turn up damaged the week before Diwali. The Crawford Market price is real right up until something goes wrong, and then there is nobody to call. Your call on which risk you carry with your employees watching the courier.

What we settled on: Rs 1,100 across the general staff, a Rs 3,500 band for the thirty long-service names, and the client gifts moved to a line the CFO owned. If you want the calendar for pulling this off before the rush, we wrote the Diwali gifting timeline and a set of gift ideas for 2026 that survive the will-they-keep-it test. For new hires, the same budget logic runs through our employee onboarding kit ideas.

Get a free per-head gifting budget review
200-plus Indian businesses trust Sirius Star. Delivery pan-India from Vashi, Navi Mumbai. Reply within 24 working hours.

If you are setting the gifting budget yourself

You do not need a consultant for the first pass. You need to split the list and read two rules.

• Split staff by purpose before you pick a number. General staff, new joiners, long-service, clients. Each gets its own per-head band, not one flat figure the whole company fights over.
• Budget the delivered cost, not the sticker. Add the box, the packing and the courier. On a small gift those three can eat a third of the value before it reaches anyone.
• Count the GST as spent, not claimable. Input credit is blocked on gifts, so the tax on the invoice is your cost. Compare quotes on the GST-inclusive number.
• Keep each employee under the yearly tax-free limit. Rs 15,000 in kind per head for FY 2026-27, across every gift in the year. Above it, the excess taxes your own staff. Give items, never gift cheques.
• Get one written, GST-compliant quote with a delivery and replacement commitment. The cheap grey-market price has no invoice and nobody to call in the last week.

Frequently asked questions

How much should a company spend on gifts per employee in India?
There is no fixed rule. Most mid-size firms spend Rs 800 to Rs 1,500 per employee on a festive gift, and Rs 2,500 to Rs 5,000 for senior or long-service staff. Set the number by purpose, not one flat figure, and budget the delivered cost with GST in it, not the sticker.

Is a corporate gift taxable for the employee in India?
A gift in kind is tax-free up to Rs 15,000 per employee per financial year under the Income-tax Rules for 2026, raised from the old Rs 5,000. Above that the excess is taxable salary. Cash and gift cheques are fully taxable from the first rupee.

Can a company claim GST input credit on employee gifts?
No. Section 17(5) of the CGST Act blocks input tax credit on goods given away as gifts. The GST you pay on the hampers is a cost you cannot recover, so compare vendor quotes on the GST-inclusive figure.

What is a reasonable Diwali gifting budget for a mid-size company?
For a 200 to 500 person firm, a common Diwali budget is Rs 1,000 to Rs 1,500 per general employee, with a higher band for senior staff and a separate client line. On 300 staff at Rs 1,200 that is about Rs 3.6 lakh before the client gifts.

Still deciding what to spend per head this year

If you cannot yet say whether your gifting budget is generous or just untidy, that is the half hour worth spending. We will split your list by purpose, price each band with GST and delivery in, and show you where a gift becomes a taxable perquisite before it does. Free, no card, no sales call. 200-plus Indian businesses trust Sirius Star, delivery pan-India from Vashi, Navi Mumbai, reply within 24 working hours. Get a free corporate gifting budget review. WhatsApp +91 91375 93228 or care@siriusstar.in, 10 to 7 IST if you would rather just ask. If your list runs to clients too, the client Diwali gift playbook is the companion to this one, and the whole corporate gifting service sits here.

P.S. Anjali here. I have sat in that Wednesday meeting more times than I expected to. The HR head who wants the gift to mean something, the finance head who wants it to make sense, both correct, both staring at the wrong cell. Bas, split the list and read the two rules. A gift budget is not about how much you spend. It is about whether the person holding the box can tell you cared, and whether your auditor agrees.