Is Your Diwali Bonus Taxable? Here’s What Salaried Employees Should Know
With Diwali around the corner, many employees are set to receive festive bonuses and gifts from their employers. However, tax experts remind that not all such perks are tax-free.
According to income tax rules, gifts worth up to ₹5,000 - such as sweets, clothes, or small gadgets - are exempt from tax. But if the total value of gifts exceeds this limit, the amount becomes fully taxable and is added to the employee’s annual income.
Meanwhile, cash bonuses, including Diwali bonuses, are always taxable. For example, a ₹30,000 Diwali bonus is treated as part of an employee’s salary and taxed as per their income slab.
Tax professionals advise employees to report all cash bonuses and gifts above ₹5,000 in their Income Tax Returns (ITR) to avoid future complications.
In short, cash bonuses and high-value gifts are taxable, while small festive tokens under ₹5,000 remain tax-free, helping employees celebrate responsibly this Diwali.
