Salaried employees across India are set to gain meaningful relief from the Income Tax Department's latest revision of the tax rules. Under the Income Tax Rules, 2026, the annual threshold above which gifts, vouchers and tokens provided by employers become taxable has been increased from ₹5,000 to ₹15,000 — a threefold jump that could reshape how companies structure employee rewards.
Previously, any gift or voucher exceeding ₹5,000 in aggregate during a financial year was treated as a taxable perquisite under Section 17(2) of the Income Tax Act, 1961, and added to the employee's salary income. This meant that even routine gestures — festival gifts, anniversary tokens, or modest voucher credits — could push an employee into a higher taxable bracket if the total crossed that narrow threshold.
Under the new rules, employees can now receive up to ₹15,000 worth of gifts, vouchers and similar tokens from their employer during the entire financial year without it being factored into their taxable income. Importantly, the limit is an aggregate cap covering all such benefits throughout the year, rather than a separate allowance for each occasion such as Diwali, Eid, Holi, or an annual function.
Tax experts note that while the revision is welcome, it primarily benefits mid-income salaried workers who receive frequent small-value tokens. High-earning employees in top tax brackets will see the provision matter less since they are already paying tax at the maximum rate, but the change does simplify compliance by removing an often-confusing perquisite calculation from their annual returns.
Employers and human resources departments will now need to recalibrate their gift and reward policies. Many organizations had been deliberately keeping individual gifts below the ₹5,000 mark to avoid triggering tax liability for employees. With the new ceiling, companies may choose to increase the value of tokens or consolidate multiple smaller gifts into fewer, higher-value ones, knowing that up to ₹15,000 remains fully exempt.
The revision is expected to be rolled out as part of the government's broader efforts to simplify the tax code and reduce compliance friction for both employers and employees. Financiers and legal advisors are advising taxpayers to keep proper records of all gift-related perquisites received from employers, as the aggregate nature of the new limit means careful tracking will still be necessary at year-end.
