Archive · 19 Jan 2026
How Bonuses and Festive Gifts Are Taxed in India
In India, bonuses and festive gifts from employers are generally taxable.
All types of bonuses, whether statutory, performance-based, or festive, are added to your salary and taxed in the year they are received.
Non-cash gifts like vouchers are exempt if their total value is below ₹5,000 in a year, but any cash gifts are always taxable.
The Finance Act, 2025 has increased the standard deduction to ₹75,000, which helps reduce the taxable income.
Employees must choose between the new tax regime (default) and the old regime, considering how their total income, including bonuses, affects their tax liability.
If your total income exceeds ₹50 lakh, a surcharge and a 4% health and education cess are applied.
Understanding these rules helps you plan your finances better.
All bonuses (statutory, performance-based, festive) are taxable and added to gross salary.
Bonuses are taxed in the year they are received, not the year they were earned.
Non-cash festive gifts are tax-exempt if their total value is below ₹5,000 annually.
The standard deduction for salaried individuals has been increased to ₹75,000 under the new tax regime.
Employees must choose between the new tax regime (default) and the old regime based on their total income.
- Who
- Salaried individuals in India
- What
- Taxation of bonuses and festive gifts
- When
- Applicable for the financial year 2025-26
- Where
- India
- Why
- To understand the tax implications of receiving bonuses and festive gifts
- Taxable Bonus Types
- Statutory, performance-based, and festive bonuses
- Taxation Basis
- Receipt basis (taxed in the year received)
- Non-Cash Gift Exemption
- Below ₹5,000 annually
- Standard Deduction (2025)
- ₹75,000 for salaried individuals
- Tax Regime Default
- New tax regime (2025 amendments)
- Section 87A Rebate
- Income up to ₹12,00,000
- Surcharge Threshold
- Income above ₹50 lakh
- Health and Education Cess
- 4% on income tax and surcharge
