Diwali Cash Bonus Tax Rules: Many companies give their employees cash as Diwali bonuses on Diwali. Sometimes this amount is quite substantial, leading some people to wonder if gifts are tax-free, but will Diwali bonuses be tax-free? If you’re also searching for the answer to this question, let’s explain whether Diwali bonuses are tax-free.

First, it’s important to understand that gifts and bonuses are two different things. If a company gives you a Diwali gift, such as sweets, clothes, gadgets, or any other item, worth less than ₹5,000, it’s not tax-free. However, if the same gift exceeds ₹5,000, it may be tax-free.

What is the tax on a Diwali bonus?

If your Diwali bonus comes in cash from your company, you will be taxable on it. Cash received from the company is considered part of your salary income. Therefore, you will not be eligible for any special exemptions. The entire bonus amount will be part of your total annual income and will be taxed according to your income tax slab.

For example, if you received a ₹20,000 bonus on Diwali, it would be added to your annual income and tax would be calculated accordingly. If you conceal it, you could face a tax notice in the future. Therefore, you should always carefully include this information when filing your ITR.

New Income Tax Slabs (New Tax Regime – Default Regime)

In the new tax system, there will now be no tax on income up to ₹ 12 lakh, as the exemption limit has been increased to ₹ 60,000.

PPF Rate Revision : Interest reduced from 12% to 7.1%, you can still earn huge profits

The post Diwali Bonus Tax Rules : Are Diwali bonuses taxable? Find out what the income tax rules say. first appeared on Rightsofemployees.com.