Diwali 2025: Are Employee Gifts and Bonus Taxable?

As Diwali 2025 approaches, many employees are looking forward to receiving festive rewards from their companies. Some receive cash bonuses, while others get gifts such as sweets, clothes, gadgets, or vouchers. But few know that these Diwali gifts and bonuses may be taxable under income tax rules. Let’s understand which ones are tax-free and which attract tax. 

Diwali 2025: Gifts up to ₹5,000 Are Tax-Free

Not all Diwali gifts are tax-free. Gifts of small value are generally exempt from tax. This includes gifts such as a box of sweets, clothes, or electronic gadgets worth up to ₹5,000. However, if the total value of gifts received from your employer exceeds ₹5,000 in a financial year, the entire amount becomes taxable.

For example, if you receive gifts worth ₹7,000, the full amount (not just ₹2,000) will be added to your taxable income under the “Salary” head. These gifts are taxed according to your income tax slab. 

Diwali 2025: Cash Bonuses Are Fully Taxable

If your employer gives you a cash bonus for Diwali, it is considered part of your salary income. For instance, if you receive a ₹30,000 Diwali bonus, it will be added to your annual income, and tax will be calculated according to your slab rate. There is no separate exemption or relaxation for festive cash bonuses under the Income Tax Act.

Failing to declare such bonuses in your income tax return (ITR) may lead to discrepancies and even a tax notice later. Hence, it’s important to include them while filing your return.

Diwali 2025: Non-Cash Gifts Above ₹5,000 Also Taxable

Expensive gifts such as jewellery, high-end electronics, or premium vouchers worth more than ₹5,000 are also taxable. Their value is added to your salary income and taxed accordingly. Only gifts below the ₹5,000 limit remain tax-free.

Read more: Diwali 2025: Know Why BSE and NSE Gained Nearly 4% in Oct 2025, Highest in 4 Months.

Conclusion

Festive cheer is always welcome, but it’s equally important to stay tax-compliant. Gifts and bonuses received during Diwali are not always tax-free, their value and form determine the tax treatment. Keeping track of these amounts will help you file your ITR correctly and enjoy a worry-free Diwali celebration.  
 
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