How are cash vouchers or gift cards treated as deemed income?

Cash vouchers, gift cards, or other similar instruments received by an employee from their employer are considered as a taxable perquisite and are treated as deemed income in the hands of the employee. The value of such vouchers or gift cards is added to the employee’s salary income and taxed accordingly. This provision aims to prevent employers from providing tax-free benefits to employees in the form of cash equivalents, thereby ensuring that such benefits are appropriately taxed.