Diwali bonus doubles the joy of the festival. Many people might have received Diwali bonus. Some people will get it in the next 1-2 days. The question is whether Diwali bonus is tax-free?
No tax on gifts up to Rs 5000
Tax experts say that all Diwali Gifts Are not tax-free. If it is not reported properly, you may receive a notice from the Income Tax Department. If the value of the gift received from the employer to the employee does not exceed Rs 5,000, then it will not come under the purview of income tax. This means that items like a box of sweets, a small gadget or festive apparel, which generally exceed this amount, will not come under the tax net.
Tax on gifts more than Rs 5000
If the gift received from the employer on Diwali is worth more than Rs 5,000, then tax will have to be paid on it. This means that expensive electronics products, gold or silver jewelery or any other expensive gift whose price is more than Rs 5000 will come under the tax net. Tax experts say that if you have received a gift or several gifts worth more than Rs 5000, then you will have to calculate the value of all of them and add them to your income. Then it will be taxed as per your tax slab.
Cash bonus is taxable
Experts say that if you get cash bonus on Diwali from your employer, then it will be considered a part of your salary. You will have to pay tax on this. This can be easily understood with the help of an example. Suppose you get a bonus of Rs 30,000 on Diwali. This will be added to your annual income. Then this will be taxed as per your slab. Cash bonus received on Diwali does not get any exemption from tax.
Reporting of high amount bonus is necessary
If you have received cash bonus on Diwali this time, you will have to show it in your income tax return next year. If you do not report it in your income tax return, you may get a notice from the Income Tax Department. Especially if you have received a cash bonus of a large amount i.e. one lakh or two lakhs, then you will definitely have to tell about it. Failure to do so may result in income tax notice.