Corporate Gifting Budget:
How to Plan & Optimise Your Spend

Gifts to employees above ₹5,000 per year are treated as perquisites and subject to TDS under Section 17(2). Client gifts are generally deductible as business expenses under Section 37(1) if they are reasonable and business-purpose-driven. Consult your CA for specific treatment.

ROI from gifting is indirect: employee retention improvement (reduced attrition costs), client renewal rates, referral rates, and brand perception surveys. Benchmark: companies that gift well report 15–20% better retention in gifted cohorts. The cost of replacing one employee (3–6 months salary) dwarfs an annual gifting spend.

Typically 2–5% of the total HR budget. For a 100-person company with ₹10L in HR budget, ₹20,000–₹50,000 annually is appropriate. Fast-growing companies in competitive talent markets often allocate 5–8%.

Three approaches: (1) Consolidate occasions - Diwali one big gift rather than 3 small ones; (2) Order in bulk - 15–35% savings from 100+ units; (3) Invest in packaging - a ₹50 kraft box elevates a ₹300 gift to feel like a ₹600 one.

Both work. Same gift signals equality and simplicity. Tiered gifting acknowledges contribution - more expensive gifts for longer-tenured or senior staff. A common approach: one base gift for all-staff (Diwali), tiered for anniversaries and recognition.