Income Tax on Diwali Gifts: Do you know that these gifts and bonuses can be taxable (Tax on Diwali gifts)? That is, you may have to pay tax on them under the Income Tax Rules.
Income Tax Rules: Only a few days are left for Diwali. On this festival, people give gifts to each other. The price of the gift also depends on how deep your relationship is with whom. 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, under the Income Tax Rules, you may have to pay tax on them.
Today we will tell you about the tax levied on Diwali and bonus and ways to avoid these taxes (Tax Saving Tips).
Tax on Diwali Gift and Bonus
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.
Gifts up to Rs 5,000: Gifts received from the company up to Rs 5,000 are not taxable.
Gifts received from others: Gifts received from non-relatives, 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 tax on your Diwali gifts and bonuses, then you will have to consider these ways of avoiding tax:
Claim exemption: If the value of your Diwali gift is up to Rs 5,000, then 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: The option of giving gift vouchers, gold coins, or any appliance instead of cash would be better. Because generally there is less chance of tax being levied on these as compared to cash bonus.
Do charity: If your company allows you to donate a part of your Diwali bonus to a recognized charity, then you can claim tax deduction for the donated amount.
Apart from these tips, there are a few other things to keep in mind when it comes to tax on Diwali gifts and bonuses:
Source of the gift: Gifts received from a friend or a non-relative are generally not taxable, regardless of the value. However, if a relative sends you a gift, it may be taxable if the value exceeds a certain limit.
Certain types of gifts, such as cash or jewellery, are more likely to be taxed than other gifts.
