Only a few days are left for Diwali. On this festival, people give gifts to each other. The price of the gift sometimes depends on how deep your relationship is with someone. On this festival, employees are also excited about getting gifts (Diwali Gift) and bonus (Diwali Bonus) from their company. But do you know that these gifts and bonuses can be taxable (Tax on Diwali gift)? That is, you may have to pay tax on them under the Income Tax Rules.
Today we will tell you about the taxes levied on Diwali and bonus and the ways to avoid these taxes (Tax Saving Tips).
Tax on Diwali gifts and bonuses
Under the Income Tax Act, any gift or bonus received from the company is considered a perquisite and being a part of your salary, it comes under the purview of tax. Therefore, the tax levied on the income from bonus will be decided according to your overall tax slab.
However, some Diwali gifts and bonuses are not taxable. Like
Gifts up to Rs 5,000: There is no tax on gifts up to Rs 5,000 received from the company.
Gifts received from others: Gifts received from a non-relative, i.e. someone who is not your relative, such as a customer or supplier, are generally not taxable, regardless of their value.
Tips to Save tax on Diwali Gifts & Bonuses
If you want to avoid paying taxes on your Diwali gifts and bonuses, you need to consider these tax saving methods:
Claim exemption: If the value of your Diwali gift is up to Rs 5,000, you can claim exemption by showing the documents related to the gift.
Save tax on expensive gifts in this way: If your company is going to give you a gift worth more than Rs 5,000, then you can request them to structure the gift in such a way that you do not have to pay tax on it. For example, they can give you a gift voucher of up to Rs 5,000 and give the remaining amount as a bonus.
Choose these options instead of cash: Instead of cash, it would be better to give gift vouchers, gold coins, or any appliance. Because generally there is less chance of tax being levied on these as compared to cash bonus.
Donate to charity: If your company allows you to donate a part of your Diwali bonus to a recognised charity, you can claim a tax deduction for the amount donated.
Apart from these tips, there are a few other things to keep in mind when it comes to taxes on Diwali gifts and bonuses:
Source of the gift: If you receive a gift from a friend or a non-relative, then generally it is not taxable, whatever its value. However, if a relative sends you a gift, then it may be taxable if the value exceeds a certain limit. Some types of gifts, such as cash or jewellery, are more likely to be taxed than other gifts.
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