Festive gifts from employers carry tax implications for salaried employees. Gifts in kind, such as gadgets or vouchers, are tax-free up to a value of Rs 5,000.
Diwali is almost here, and for many salaried employees, that means looking forward to festive bonuses, gifts, and little perks from the office. From sweets and gadgets to gift vouchers and cash bonuses, employers often show their appreciation during the festival. But here's the catch, some of these goodies may attract tax, and not knowing the rules could lead to surprises from the Income Tax Department.
Small Gifts Are Usually Safe
Not everything you get this Diwali will be taxed. Simple gifts like a box of sweets, a scarf, or a gadget worth up to Rs 5,000 generally don't count as taxable income. Think of these as small tokens of appreciation—meant to spread festive cheer, not extra paperwork.
Big Gifts? Watch Out
If your gift goes beyond Rs 5,000, say, a designer watch, jewellery, or high-end electronics, that's when the taxman comes knocking. The value of these items is added to your annual income and taxed according to your income slab, just like your regular salary. So while it's exciting to receive something expensive, it's good to know that it could increase your tax liability.
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Cash Bonuses Are Fully Taxable
Cash bonuses, including your Diwali bonus, are always treated as part of your salary. For example, a Rs 30,000 bonus will be added to your total yearly income and taxed according to your slab. There's no special exemption for festive cash, so make sure you report it correctly in your Income Tax Return to avoid any notices.
