What is Gift Voucher/Gift Certificate &How Does it Work?
The three terms gift card, gift voucher and gift certificate in India can be defined as a mode of transfer in the form of gift or salary or incentives (towards employee, friends etc). This replaces cash and allows the receiver to purchase service or products from certain places (malls, showrooms, bazaars etc) within a particular geographic location (say India) as specified on the gift voucher.
This mode of transfer is used by corporate bodies, employees and people from many other fields in the form of prepaid gift cards, gift vouchers etc for various beneficial reasons.
How each gift certificate works:-
Gift cards: These cards are the modern day replacement of those cash envelopes that were given as gift in marriage and other ceremonies in India. While that envelope had cash that could be spent or saved by the person who is gifted, these cards are typically meant for shopping, dining, entertainment and any other expense the gifted person may choose. These cards are sold by many banks in recent times in India. Such cards require the backup guarantee of a bank. They can be used in merchant outlets where they accept debit cards. One can check the balance on these cards through ATMs. The identity PIN for the card is provided with the card during the purchase. The gift cards will also have certain expiry date before which the card has to be utilized. The following banks offer gift cards in India today.
- SBI
- HDFC
- Axis bank
- Central bank of India
Gift vouchers: These are certificates that entitle the holder to receive products or services of specified sum of amount from a person (business like hotel, shopping mall, showroom etc). The specified amount is mentioned on the voucher itself and depending on the type of voucher, the receiver (employee who receives from employer, gifted to relatives or friends etc) can shop for products or use services from specified places where they are applicable. This mode is mainly used by corporate bodies as payment of salary and incentives to employees, and this is because this mode saves tax. Gift vouchers have an expiry date and the receiver has to utilize vouchers to pay his expenses before that date.
Gift and discount coupons: These coupons are provided by banks, merchant establishments or any other business on purchase of particular product or service in the form of a gift or festival offer. These coupons have an expiry date and basically work as discount on future purchase. Therefore the company or business that sells the product is marketed through these vouchers and at the same time the discount has the potential to pull the customer towards purchase of product. The discount amount in most cases is balanced by increasing the selling price of the product on which discount is named.
Benefits of gift certificates:-
- The mode of transaction makes it easier for the certificate holder to make his payments of bills of products and services by removing out the necessity to carry cash while shopping or at any other applicable place.
- This mode reduces the cost of printing new notes for the government of a country to some extent.
- Bringing in electronic technology makes the system much secure and traceable as compared to carrying cash for payments. (For ex: gift cards use PIN and even if it is lost, it will not be a problem since it can be blocked)
- The taxation on such gift vouchers starts from a slab of Rs 5,000 and thereby makes this mode of payment of salary popular among corporate bodies (especially MNCs) in India.
Contributed By: Aruna Sharma |
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Mrs. Sharma holds a Masters in Financial Management from University of Mumbai. She has graduated from the University of Mumbai. | |
- Charanjit:Are gift vouchers same as discount coupons. Can gift voucher be applicable only if items worth 5 times of voucher are purchased. Is calling such document as gift voucher illegal14-Jan-2013 10:21 AMReply
