Cash offers the most freedom, but tax and payroll treatment can reduce its appeal; multi-brand vouchers may deliver greater practical value than retailer-specific rewards.
A Rs 2,000 festive gift may look identical on paper, but its real-world value can vary sharply depending on how it is delivered. Cash gives the recipient complete freedom, yet a voucher tied to a single retailer may be more limited, while a multi-brand digital card can sit somewhere in between by widening the range of places where it can be spent. Ahead of Diwali, many employers use such rewards as part of staff gifting, and Smiti Bhatt Deorah, co-founder and chief operating officer of AdvantageClub.ai, said the true measure is not the amount spent by the employer but the usefulness the employee receives.
That distinction matters because different employees will assign different worth to the same sum. One person may need groceries, while another may prefer to use the reward on a family meal or leisure activity. Cash is the most flexible option and can be used for everyday costs, savings or emergencies, but it is often treated as salary for tax purposes, which can reduce the net benefit. Deorah also pointed out that cash may feel less like a gift when it arrives through payroll, even if its face value is unchanged.
Brand-specific vouchers can look attractive because employers may secure discounts when buying them in bulk, effectively stretching the purchasing power on offer. Yet their usefulness depends on whether the recipient actually wants to shop with that brand, and expiry dates or spending restrictions can erode the value further. Industry commentary on gift cards and prepaid cards has long made the same point: a targeted reward can encourage use for a particular purpose, but the more narrowly it is tailored, the greater the risk that it goes unused.
Multi-brand gift cards and flexible reward wallets try to solve that problem by giving employees more choice. A worker might split a Rs 2,000 balance between groceries, dining or shopping, depending on immediate needs. Deorah said that flexibility can also cut the risk of unused balances, which the gift card industry refers to as breakage. Tax treatment is another key factor. Under rules introduced in April 2026, the annual threshold for qualifying employer gifts and vouchers rose from Rs 5,000 to Rs 15,000, according to Deorah. Non-cash gifts within that limit may be exempt, while cash gifts generally do not qualify for the same relief and may be taxed as salary income. Employees should therefore check both the form of the reward and the payroll treatment before assuming a festive gift is tax-free.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
