What is the ruling on giving a gift to someone on their occasion if I have nothing on hand, knowing that they previously gave me a gift on my occasion, and it is the custom of my village to exchange gifts?

It is commendable for whoever receives a gift to reciprocate with something similar or better, as the Prophet said: "Whoever does you a favor, reciprocate it; and if you cannot find anything with which to reciprocate, then supplicate for him." A poor person is not obliged to return a gift, and what is prescribed is for a Muslim to give gifts without expecting anything in return except reward from Allah.