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GIFTS TO USEFUL CONTACTS ON FESTIVALS INCOME TAX APPLICABILITY

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M.Amin

Partner

96 Points Posted on 14 November 2026

Will be obliged getting guidance on Income tax applicability on festival gifts in kind not cash to useful contacts under The Income-tax Act, 2025 and rules 2026

Replies (2)

Quick Summary

This discussion clarifies the income tax implications of giving festival gifts in kind (not cash) to business contacts. Such gifts are generally deductible as business promotion expenses if documented properly and for valid business relationships. However, if the total value of gifts to one person exceeds ₹20,000 in a financial year, TDS under Section 194R (or updated provisions) applies, requiring the giver to either collect/deposit TDS from the recipient or pay it themselves by grossing up the amount.

Aashok Kumar Sharma

Finance/Compliance Consultant

77177 Points Posted on 14 November 2026

Festival gifts in kind to business contacts are deductible as legitimate business promotion expenses if properly documented and for valid business relationships. However, if the total value of gifts to any individual recipient exceeds ₹20,000 in a financial year, the giver must comply with 10% TDS under Section 194R (or Section 393 under updated provisions). For purely non-cash gifts, tax must either be collected/deposited via advance tax challan from the recipient or paid by the business via grossing up.