Gift allowance taxability in the hands of employee (Income tax)

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This discussion clarifies the tax treatment of gift allowances provided by employers, often through wallet services. While gifts given for performance above the standard CTC are tax-exempt up to £5,000, allowances carved out from an employee's existing CTC and paid monthly are generally considered taxable and potentially tax evasion by the IT department. It's crucial to check Form 16 to confirm if such allowances are part of the CTC.

suman guduru

suman guduru (Querist)
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10 May 2024 Hi All,
Some companies are providing wallet services like sodexo,zaggle etc in which some components are carved out from employee salary and offering as allowances on monthly basis to save tax for employees.
One such component is Gift.

If gift is given by employer for performance over and above CTC then it can be tax exempt upto 5000.

But if 5000 is carved out from CTC of employee and paid on monthly basis(5000/12) by employer,i dont think it is tax exempt as it is part of CTC of employee and IT department may say that this is tax evasion.

Please clarify