Received a Diwali bonus or voucher from your employer? Know the tax exemption limit and rules for salaried employees

Diwali gifts from employers worth less than ₹15,000 in aggregate can be tax-free, but cash bonuses are taxable as salary. Here's how festive payouts affect your income tax, rebate eligibility and take-home pay under the new tax rules.

Diwali gifts and bonuses from employers can provide salaried employees with some extra spending money during the festive season. However, not every festive benefit enjoys the same tax treatment. While qualifying gifts and vouchers worth less than ₹15,000 in aggregate during the tax year can be tax-free, a cash bonus is generally taxable as salary from the first rupee.

The distinction is important for employees, particularly those earning close to the ₹12 lakh taxable-income threshold under the new tax regime. A festive bonus could push their income above the rebate limit and increase their tax liability.

The Income-tax Act, 2025, and the Income-tax Rules, 2026, which came into effect on 1 April 2026, have increased the exemption for qualifying employer gifts from ₹5,000 to less than ₹15,000. Here is how the rules apply to different types of festive benefits.

1. Employer gifts and vouchers below ₹15,000 are tax-free

Under Rule 15 of the Income-tax Rules, 2026, the value of gifts, vouchers and tokens received from an employer is treated as nil if their aggregate value remains below ₹15,000 during the tax year.

The exemption applies to gifts received by employees or members of their household on ceremonial occasions or otherwise. It can cover physical gifts, festive hampers and qualifying shopping vouchers.

For example, if an employee receives a Diwali hamper worth ₹8,000 and another gift worth ₹5,000 from the employer during the same tax year, the aggregate value of ₹13,000 remains tax-free.

However, if the aggregate value reaches ₹15,000, the entire value becomes taxable as a perquisite, not merely the amount exceeding the exemption threshold. The limit is annual, not applicable separately to every festival or occasion.

A Diwali bonus credited directly to an employee's bank account is generally treated as salary income and taxed at the applicable income-tax slab rate. It does not qualify for the ₹15,000 gift exemption simply because the employer pays it during the festive season.

For instance, if an employee receives a Diwali bonus of ₹50,000, the amount is added to their annual salary income for tax calculation.

The additional income can also affect the employee's eligibility for tax rebates, depending on their total taxable income.

Under Section 156 of the Income-tax Act, 2025, eligible resident individuals under the new tax regime can claim a rebate of up to ₹60,000 if their total taxable income does not exceed ₹12 lakh. Marginal relief is available in specified cases where income exceeds this limit.

Consider an employee earning an annual salary of ₹12.60 lakh.

After claiming the standard deduction of ₹75,000 available under the new tax regime, the employee's taxable income comes to ₹11.85 lakh. This keeps the employee within the ₹12 lakh rebate threshold.

Now, assume the employee receives a Diwali bonus of ₹50,000.

The employee's taxable income now exceeds ₹12 lakh, making them ineligible for the full rebate. However, marginal relief limits the additional tax burden.

Based on the applicable new-regime slabs, the tax after marginal relief and 4% health and education cess works out to ₹36,400, assuming no other income or deductions.

This means the employee does not retain the entire ₹50,000 bonus as additional take-home income.

Employees should check whether their Diwali bonus has been included in their taxable salary and whether tax has been deducted accordingly. They should also reconcile their salary slips and TDS details with Form 130, which replaces Form 16 for tax year 2026-27 onwards.

If the employer has not correctly accounted for a taxable benefit, employees should raise the discrepancy with their payroll or HR department.