Quick answer: Your Diwali bonus is fully taxable as salary. Non-cash gifts, hampers and vouchers from your employer are tax-free up to ₹15,000 in a financial year under the new Income-tax Rules, 2026 (earlier the limit was ₹5,000). Cross ₹15,000 even by a rupee, and the whole amount becomes taxable. Gifts from relatives are always tax-free. Gifts from friends and others are tax-free only if their total value in the year is ₹50,000 or less; above that, the entire amount is taxed.
Why this year is different
The new Income-tax Act, 2025 and the Income-tax Rules, 2026 came into force on 1 April 2026. Most gift rules carried over, but one change matters this Diwali: the tax-free limit for employer gifts went up from ₹5,000 to ₹15,000 a year.
Diwali gift and bonus tax at a glance
| What you receive | Tax-free? | Rule |
|---|---|---|
| Diwali bonus (cash/bank transfer) | No | Fully taxable as salary from the first rupee |
| Cash gift from employer | No | Treated as salary |
| Hamper, gadget, voucher from employer | Yes, up to ₹15,000 a year in total | Above ₹15,000, the whole value is taxable |
| Gift from a relative (any amount) | Yes | Always exempt |
| Gifts from friends/others | Yes, if total ≤ ₹50,000 in the year | Above ₹50,000, the whole amount is taxable |
| Gifts received on your own wedding | Yes | Exempt, from anyone |
| Gift under a will or inheritance | Yes | Exempt |
1. Is the Diwali bonus taxable?
Yes. A bonus is part of your salary. It is added to your income and taxed at your slab rate. Your employer deducts TDS on it.
Example: Priya earns ₹9 lakh a year and gets a ₹40,000 Diwali bonus. Her salary income becomes ₹9.4 lakh. Under the new regime, her income is still within the range where the rebate can make the tax nil (taxable income up to ₹12 lakh), so she may pay no tax. Someone earning ₹20 lakh would pay tax on the bonus at their higher slab rate. See our income tax slabs FY 2026-27 guide.
2. Employer gifts: the new ₹15,000 rule (and the cliff)
Non-cash gifts, gift vouchers and tokens from your employer are tax-free up to a total of ₹15,000 in a financial year.
This is a cliff-edge rule, not a deduction:
| Total employer gifts in the year | Taxable amount |
|---|---|
| ₹12,000 | ₹0 |
| ₹15,000 | ₹0 |
| ₹15,001 | ₹15,001 (the full amount) |
| ₹25,000 | ₹25,000 |
So if your company gives a ₹10,000 Diwali hamper and a ₹6,000 New Year voucher, the total is ₹16,000, and the full ₹16,000 is added to your salary as a perquisite.
Cash is different. Any cash gift from your employer, for any occasion, is taxed as salary from the first rupee.
3. Gifts from relatives: always tax-free
Money, gold, a phone, shares, even property: if it comes from a relative as defined in the tax law, it is fully tax-free, whatever the amount.
Who counts as a relative:
- Spouse
- Parents, step-parents and grandparents (and great-grandparents)
- Children, step-children and adopted children, grandchildren (and their spouses)
- Brothers and sisters, half-brothers and half-sisters (and their spouses)
- Parents' brothers and sisters (and their spouses)
- Spouse's parents, grandparents and siblings (and their spouses)
Who is not a relative: cousins, nephews, nieces and step-siblings. Gifts from them are treated like gifts from friends.
4. Gifts from friends, colleagues and clients: the ₹50,000 rule
Gifts of money from non-relatives are tax-free only if the total for the year is ₹50,000 or less. If the total crosses ₹50,000, the entire amount is taxed as income from other sources, not just the part above ₹50,000.
A separate ₹50,000 limit applies to the value of movable property such as gold, jewellery, shares or paintings received from non-relatives. Money and property are checked separately.
Example: Amit gets ₹20,000 from a friend, ₹15,000 from a cousin and ₹20,000 by bank transfer from a neighbour. The total money from non-relatives is ₹55,000. Because it is above ₹50,000, all ₹55,000 is taxable. If the neighbour had given a ₹20,000 gold coin instead, the money total would be ₹35,000 and the property total ₹20,000. Both are under their limits, so nothing would be taxable.
Not covered: sweets, dry fruits, clothes and household items are generally not counted, because the rule targets money and specified movable property such as jewellery, shares and art.
5. Gift vouchers and digital gold
- From employer: counts towards the ₹15,000 limit.
- From friends: treated like money gifts, so they count towards the ₹50,000 limit.
- Digital gold or gold coins: count at their market value.
Smart and legal ways to give Diwali gifts
- Gift to relatives freely. Parents, siblings and in-laws can give or receive any amount tax-free.
- Keep a record of large gifts: a simple gift deed or bank transfer with the note "Diwali gift".
- Employers: keep each employee's annual gift total under ₹15,000 to keep it tax-free.
- Pay by bank transfer, not cash, for large gifts. It is easier to prove later.
- Watch the clubbing rule: income earned on money gifted to your spouse may be added to your income.
Frequently asked questions
Is the Diwali bonus taxable in India?
Yes. It is part of salary and taxed at your slab rate.
What is the tax-free limit for gifts from an employer in 2026?
₹15,000 in a financial year for non-cash gifts and vouchers, under the Income-tax Rules, 2026. Cash gifts are fully taxable.
Are gifts from my brother or parents taxable?
No. Gifts from relatives are fully tax-free, whatever the amount.
Is a gift from my cousin taxable?
Cousins are not "relatives" for this rule. Their gifts count towards the ₹50,000 annual limit for non-relatives.
Do I need to show tax-free gifts in my ITR?
Exempt gifts are generally reported under exempt income in the ITR. Keep proof of large gifts in case the tax department asks.
The bottom line
Enjoy your hamper. The new ₹15,000 limit covers most corporate Diwali gifts. Remember that your bonus is always taxed, relatives can gift freely, and gifts from everyone else need to stay within ₹50,000 a year.
Related reading: Diwali 2026 dates · How to check gold purity before Dhanteras · Salary negotiation: CTC vs in-hand
Sources to verify
- Income Tax Department: Deemed income including gifts (incometaxindia.gov.in)
- Income-tax Act, 2025 and Income-tax Rules, 2026 (effective 1 April 2026)
This article is for general information and is not tax advice. Consult a chartered accountant for your specific situation.
