Getting a bonus from your employer is one of the most rewarding experiences; however, it is also very important for you to understand the tax implications that accompany your bonus. If you are residing and working in India, then you need to know that all your bonuses are taxable. Now, if you are wondering how are bonuses taxed, then learning about the bonus tax rate will assist you in your query.
When and how is the bonus taxed in India?
Before learning how much are bonuses taxed, you should also know when your bonuses are taxed in India. Whether you receive a bonus at the end of the financial year or somewhere else in between, the bonus will be taxed by adding it to your total income at the end of the current financial year. There are different income tax slabs for bonuses in India, and this is how it works.
- Income Tax on Bonus – Once the bonus has been added to your total income for the year, the aggregate amount will be calculated according to the bonus tax rate.
- TDS on Bonus – In some cases, the employer can also deduct TDS on your bonuses, and this deduction is made when your bonus is paid to you. However, this amount is also based on your overall income.
This is what you need to know if you want to know are bonuses taxed differently and how much tax you need to pay on your bonuses. So, the next time you get a bonus, keep in mind the tax you need to pay.
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