New Delhi, Nov. 10 -- With Diwali celebrations over, salaried employees who received festive gifts or bonuses from their employers should understand how these benefits are treated under income tax rules. While gifts and shopping vouchers may qualify for an exemption within the prescribed annual limit, cash bonuses are generally taxable as salary income.

The distinction matters when calculating taxable income and checking eligibility for tax rebates. The rules are now governed under the Income-tax Act, 2025, and the Income-tax Rules, 2026, which came into effect on 1 April 2026.

Here is what employees should know about the tax treatment of their festive rewards.

Under the Income-tax Act 2025, the taxable value of qualifying gifts, vouch...