Corporate Gifts Accounting Entry

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Aniket Kumar

98 Points Posted on 30 May 2022

Customers who fulfill certain terms in an order, are given gold coins of 1 gm, 2 gm, etc.

What is the accounting treatment for it? Is it to be added to indirect expense directly? Is it required to maintain any records of such gifts given?

Replies (3)

Quick Summary

When customers receive gold coins as a reward for meeting order terms, this is generally treated as a sales promotion or marketing expense under indirect costs. It's crucial to maintain detailed records of these gifts, including customer information, order details, and the gift's value, for audit and tax purposes. The typical accounting entry involves debiting a 'Business Promotion Expenses' account and crediting 'Cash/Bank'.

prasad Nilugal

GST Practitioner & Accounts

9000 Points Posted on 30 May 2022

Show as Business pramotion Expenses , under Indirect expenses profit and loss account

Business Pramotion Expenses A/c Dr
To Cash / Bank A/c Cr
( Gold coin given as gift for Business pramotion)

Maintan separate record quantity wise also as Gift given .

Yash Jangid

22 Points Posted on 13 May 2025

When customers receive gold coins (e.g., 1 gm, 2 gm, etc.) as part of fulfilling certain order conditions, the accounting treatment typically falls under indirect expenses—specifically as part of sales promotion or marketing expenses. However, it’s important to classify it correctly based on your company’s chart of accounts and policies.

Yes, records of such gifts must be maintained—including customer details, order fulfillment criteria, value of the gift, and date of issue—for audit, tax, and internal control purposes.

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Aashok Kumar Sharma

Finance/Compliance Consultant

77995 Points Posted on 06 November 2026

Treatment of gold coins given to customers on orders:

• Accounting: buy the coins into a separate "Promotional Stock – Gold Coins" (inventory) account, with quantity. Expense on issue: Dr Business Promotion / Sales Promotion (indirect expense), Cr Promotional Stock. Keep a coin register (customer, invoice, weight).

• If the scheme is a pre-announced incentive tied to the order, it may be seen as a discount. Accounting then reduces revenue (Ind AS 115 "consideration payable to customer"); under AS 9, it is typically an expense.

• TDS: Sec 194R requires 10% TDS where benefits to a business customer exceed Rs 20,000 in a FY. Since these are in kind, ensure the tax is paid before release (CBDT Circular 12/2022). No 194R for retail (non-business) customers.

• GST: ITC on gold coins given free is blocked (Sec 17(5)(h)). Don't claim it, or reverse it.

• Income-tax: deductible as business expenditure (Sec 37(1)), with documentation linking it to the sales scheme.