Diwali bonus and gifts in 2026: what is taxable, the new ₹15,000 employer-gift limit, and the ₹50,000 rule

Last updated 11 Oct 2026 · India

Short answer. A cash Diwali bonus is part of your salary: fully taxable, with TDS by your employer. Gifts, vouchers or tokens from your employer are tax-free only if their total for the tax year is below ₹15,000 (Income-tax Rules 2026, up from ₹5,000); cash and gift cheques are taxable. Gifts from relatives are exempt whatever the amount. Gifts of money or property from friends, clients or others are taxable if they total more than ₹50,000 in the tax year, and then the whole amount is taxable, not just the excess.

Why these rules exist

Without them, part of a salary could be paid as "gifts" and escape tax. The law allows small, genuine gifts and taxes the rest as salary or as income from other sources. Diwali is when most of these gifts happen, so it's the moment to get them right.

The rules at a glance (tax year 2026-27)

What you receive	From	Tax treatment
Cash bonus or ex-gratia	Employer	Salary; fully taxable; TDS under section 392 (old 192)
Gift, voucher or token (sweets box, hamper, gift card)	Employer	Nil value if the year's total is below ₹15,000; otherwise the full value is a taxable perquisite
Gift cheque or cash "gift"	Employer	Taxable as salary
Money, jewellery, shares, property	Relative (spouse, siblings, parents, grandparents, children, spouse's relatives as defined)	Exempt
Money or property	Friends, clients, others	Exempt if the year's total is ₹50,000 or less; if it exceeds ₹50,000, the whole amount is taxable (section 92(2)(m))
Gifts on your own wedding	Anyone	Exempt

Statutory bonus is a separate thing

Many employers pay the annual statutory bonus around Diwali. Since 21 November 2025 it comes under the Code on Wages, 2019 (which replaced the Payment of Bonus Act). It applies to employees earning up to a wage ceiling fixed by the government who worked at least 30 days in the accounting year, at 8.33% to 20% of wages. A voluntary "Diwali bonus" on top is still taxable salary. Payment deadlines and the wage ceiling depend on the rules that apply to you; check with your payroll adviser.

Common mistakes

Treating ₹15,000 as per occasion. It is one total for the whole tax year (Diwali, birthday, work anniversary together).
Hitting exactly ₹15,000. The rule says "below ₹15,000". At or above it, the full value is taxable, not only the excess.
Calling cash a gift. Cash and gift cheques from an employer are salary.
Adding up friends' gifts. Five gifts of ₹12,000 each from friends make ₹60,000: all of it is taxable.
Assuming last year's ₹5,000 limit. The higher limit applies from 1 April 2026.

Checklist

Employees: list every employer gift and voucher this tax year
Employers: track gift value per employee and run payroll TDS on cash bonuses
Keep a note of gifts from non-relatives with dates and amounts
Large family gifts: keep a simple gift letter and bank trail
Show taxable gifts under the right head in your return

Frequently asked questions

Is a Diwali bonus taxable?

Yes. A cash bonus from your employer is salary and is fully taxable; your employer deducts TDS.

How much can an employer gift tax-free in 2026-27?

Gifts, vouchers or tokens have nil taxable value if their total for the tax year is below ₹15,000, under the Income-tax Rules 2026. Cash and gift cheques are taxable.

Are Diwali gifts from friends taxable?

Only if gifts of money or property from non-relatives total more than ₹50,000 in the tax year; then the whole amount is taxable.

Are gifts from relatives taxable?

No. Gifts from relatives as defined in the Income-tax Act are exempt, whatever the amount.

Official sources

Not tax or legal advice. The ₹15,000 figure is from the Income-tax Rules 2026 as reported by EY and others; we did not open the official rule text ourselves. Confirm your case with your CA or payroll team. Last checked 11 Oct 2026.

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