GST on corporate gifts in India: a FY2026-27 guide for finance teams

GST on a corporate gift is usually a cost, not a credit. Section 17(5)(h) of the CGST Act blocks input tax credit on goods disposed of by way of gift, and that holds whether the gift goes to an employee or a client. What differs between the two is whether the gift is itself a supply, and which income-tax limit applies to the person who receives it.

The rule that applies to every gift

CBIC Circular No. 92/11/2019-GST of 7 March 2019 says two things. Goods given free of cost, without consideration, are not a supply under GST, except where Schedule I of the CGST Act applies. And input tax credit is not available on inputs used for gifts or free samples given without consideration. So the GST charged on the invoice for gifts stays on your books as a cost.

Employee gifts: ₹50,000 for GST, ₹15,000 for income tax

Employees are the Schedule I case. Under Entry 2 of Schedule I, gifts not exceeding ₹50,000 in a financial year from an employer to an employee are not treated as a supply, so no output GST arises on them. Above ₹50,000 the employer accounts for GST on the excess.

Income tax is a separate test on the employee's side. From 1 April 2026, gifts in kind from an employer carry nil perquisite value up to an aggregate of ₹15,000 a tax year, under Rule 3(7)(iv), up from ₹5,000. Every gift in kind in the year counts towards it: the welcome kit, the Diwali box, the anniversary gift. Cash and gift cheques get no exemption. Whether crossing ₹15,000 makes the whole amount taxable or only the excess is contested; the employee swag tax guide sets out both readings.

Client gifts: no output GST, no credit

A gift to a client is not a Schedule I case, because a client is not your employee and, in the usual case, not a related person. Given without consideration, it is not a supply, so you charge no GST on it. The GST you paid buying it is still blocked under Section 17(5)(h). For budgeting, a client gift costs its price plus the full GST.

Hampers are taxed at their highest-rate item

A hamper of unrelated items sold for one price is a mixed supply. Section 8(b) of the CGST Act treats a mixed supply as a supply of the item that attracts the highest rate of tax. A box with sweets, dry fruits and a steel bottle is taxed at the rate of whichever of those carries the highest rate, on the whole price. Ask your vendor which rate the hamper is invoiced at before you compare quotes.

Apparel has its own split. Since 22 September 2025, following the 56th GST Council meeting, apparel is taxed at 5% up to ₹2,500 a piece and 18% above. A jacket priced just over ₹2,500 carries more than three times the rate of a hoodie priced just under it.

200 employees and 40 clients, worked through

One hamper for everyone: the Adalwin Commerce™ Wellness Hamper, Premium, at ₹1,999 a piece plus GST before the volume discount. 240 pieces sit in the 22% step (100 to 249 units).

The GST rate is an illustration; a hamper is invoiced at the rate of its highest-rate item. The ₹67,358 is a cost, so the budget line is the invoice total. Each employee's ₹1,840 is well inside both the ₹50,000 GST limit and the ₹15,000 income-tax limit, provided their other gifts in kind for the year stay under the balance.

Keep gifts and business purchases apart

If gifts and goods the company uses itself arrive on one purchase order, ask for them on separate invoices or at least separate lines. Office supplies used in the business are ordinary inputs and credit is generally available on them, subject to the usual conditions; gifts on the same invoice are blocked. Mixing them makes your team unpick the credit by hand.

What the invoice should carry

• Your GSTIN, and the right one when offices are in different states. We invoice branch-wise across GSTINs.
• The HSN code and GST rate on every line, so the hamper rate and any apparel split can be checked.
• A description that says what was supplied, not just "gift items", so the claim to be a gift and the quantity can be matched to your distribution list.
• The delivery addresses behind a pan-India drop, for your records of who received what.

What finance teams get wrong

• Budgeting a client gift net of GST. The credit is blocked, so the GST is part of the cost.
• Treating ₹50,000 and ₹15,000 as one limit. They are different taxes, on different people, over different years: the GST limit runs by financial year, the income-tax limit by tax year.
• Counting only the Diwali gift. The ₹15,000 income-tax limit is the total of every gift in kind in the year.
• Comparing hamper quotes without the rate. Two hampers at the same price can carry different GST.

We are a merchandise company, not a tax adviser. Check the treatment with yours before the budget is set.

Send your headcount, client list size and budget through the form on the Diwali gifting page. You get a written quote within 24 hours, Monday to Saturday, with the HSN code and rate on every line.