Diwali Bonus: When Diwali arrives, companies, large and small, give gifts to their employees. Most companies give bonuses in the form of cash, while many also provide clothing, electronic goods, and other items. If a company gives a cash bonus, will it be taxable?
What tax is levied on gifts received during festivals? Tax rules apply to these. This may sound strange to you. To alleviate confusion, we’ll explain below whether a Diwali gift is taxable.
Do Diwali Gifts Have to Be Taxed?
If a company gifted you a box of sweets or a gadget worth ₹5,000 on Diwali, you won’t have to pay any tax on this gift. If the gift exceeds ₹5,000, such as an expensive smartphone or jewellery, the full value will be added to your income. After this, this amount will be taxed at the same rate as your salary.
How much tax is due on a Diwali bonus?
If a company provides an employee with a bonus of Rs. 20,000 on Diwali, it will be considered part of their salary. This means that it will be taxed at the same rate as your salary. You won’t be given any additional exemptions.
This bonus will also be added to your annual income. You are taxed according to your income tax slab. If you don’t include it in your Income Tax Return (ITR), you may later receive a notice from the Income Tax Department.
Learn what the tax rules say.
For your information, under the new Income Tax System 2025, which has now become the default, if your annual income is up to Rs. 4 lakh, you won’t have to pay any tax. If your income is between Rs. 4 lakh and Rs. 8 lakh, the tax rate will be 5%. 10% from 8 lakh to 12 lakh, 15% from 12 lakh to 16 lakh, 20% from 16 lakh to 20 lakh, 25% from 20 lakh to 24 lakh.