New Delhi, Oct. 15 -- It's finally the festive season and many salaried employees look forward to receiving gifts and bonuses from their employers, especially for Diwali. This additional payout can help individuals cover their shopping expenses for the occasion or give their savings a boost.

However, before you plan how to spend the extra money, it is important to understand its tax implications. Gifts (both cash and non-cash) are only exempt from tax when received during marriages or from specified family members.

As per the income tax law, a cash bonus received from an employer is treated as part of salary income and taxed at the employee's applicable tax slab rate.

For example, if an employee gets a Diwali cash bonus of Rs.20,000, t...