Many companies gift their employees with Smartphones, tablets, laptops etc. as a reward for their endeavours. Employees may also receive free holiday, bonus or a performance increment, as gifts. However, employee should remember that such gifts are absolutely taxable if the monetary value of gifts exceeds a certain limit. Income Tax Act provides that gifts made in cash or kind by the employer are not taxable up to Rs 5,000/-.
Have your received any gift or bonus from your employer? The same is taxable if the value of gifts is more than Rs. 5,000/-. Gifts may be received by the employee or by a member of the employee’s family. It can be in cash, kind. Value of gifts is added to the salary income while paying taxes.
So next time you receive gifts from your employer do not forget to pay tax on it. It is advisable to keep a record or a documentary evidence of such gifts received, in order to avoid disputes relating to Income-tax assessment in future.