Business Today
As the festival of lights draws near, homes and offices across India are preparing for the annual exchange of sweets, gifts, and bonuses — a hallmark of Diwali celebrations. But while these festive rewards spread joy, few realise that some of them could also invite the attention of the tax department. Advertisement
Tax advisory platform Tax Buddy recently highlighted a real-life example that went viral on social media platform X. Arjun, a corporate employee, received a generous Diwali package from his employer:
Rs 80,000 as a cash bonus
An Apple Watch worth Rs 25,000
What seemed like a festive windfall ultimately cost him Rs 32,760 in taxes.
Here’s how the taxman views your Diwali rewards:
1. Bonuses are taxable as salary
Under Section 17(1) of the Income Tax Act, any Diwali bonus