New Delhi, Nov. 8 -- 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 Rs.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 Rs.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 increa...