Diwali bonus season is here. For many salaried employees in Noida and across Delhi NCR, the bonus is the biggest single payment of the year, and it raises the same question every time: how much of it will go in tax? The answer depends on your regime and on where your income sits. Around the ₹12 lakh mark, a bonus can lose far more to tax than people expect.
A bonus is salary
Performance bonus, festival bonus, statutory bonus or ex-gratia: all of it is salary, taxed at your slab rate in the year you receive it. There is no separate rate for a bonus.
Your employer deducts TDS on salary under section 392 of the new Income-tax Act (earlier section 192). When a bonus is paid, payroll re-estimates your income for the whole year and adjusts the TDS. That is why the TDS in the bonus month, or in the months after it, can jump sharply. It is spreading a full year's extra tax over the months that remain.
The new regime rates for tax year 2026-27
| Taxable income | Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4–8 lakh | 5% |
| ₹8–12 lakh | 10% |
| ₹12–16 lakh | 15% |
| ₹16–20 lakh | 20% |
| ₹20–24 lakh | 25% |
| Above ₹24 lakh | 30% |
Salaried employees also get a ₹75,000 standard deduction, and a rebate makes the tax nil if taxable income is up to ₹12 lakh. In practice, a salary of up to ₹12.75 lakh pays no tax under the new regime.
The ₹12 lakh trap
The rebate stops once taxable income crosses ₹12 lakh. Without any relief, ₹1 of extra income would create ₹60,000 of tax. The law softens this with marginal relief: your tax cannot be more than the amount by which your income exceeds ₹12 lakh. The relief runs out at about ₹12.71 lakh of taxable income. Here is what happens to an employee with a gross salary of ₹12.5 lakh:
| Bonus | Taxable income | Tax with cess | Lost to tax |
|---|---|---|---|
| ₹25,000 | ₹12.00 lakh | Nil | 0% |
| ₹50,000 | ₹12.25 lakh | ₹26,000 | 52% |
| ₹1,00,000 | ₹12.75 lakh | ₹74,100 | 74% |
| ₹2,00,000 | ₹13.75 lakh | ₹89,700 | 45% |
Someone at ₹12.5 lakh who gets a ₹1 lakh bonus keeps only about ₹26,000 of it. On salaries well above ₹13 lakh the effect fades, and the bonus is simply taxed at your top slab: 15% to 30% plus cess.
Ways to keep more of the bonus
- Employer contribution to NPS: under the new regime, your employer's contribution to your NPS account is deductible up to 14% of basic salary. If your employer allows it, routing part of the bonus or salary into NPS can bring taxable income back under ₹12 lakh.
- Gifts and vouchers in kind: employer gifts in kind are tax-free up to ₹15,000 a year from 2026-27. If the company offers a choice, a part of a festival payout as vouchers costs nothing in tax.
- Check the old regime: with a home loan, HRA, 80C and health insurance, the old regime can still work out cheaper at higher salaries. The bonus may change which regime wins this year. Run both before your employer locks the TDS.
- Timing: the bonus is taxed in the year it is received. If your employer offers a choice between March and April, the year with lower income is usually better.
- Declare correctly to payroll: submit your investment and rent proofs on Form 124 (earlier Form 12BB) on time, so TDS isn't deducted on deductions you are entitled to.
Statutory bonus
Under the bonus law, now part of the Code on Wages, eligible employees get a minimum statutory bonus of 8.33% of wages, payable within eight months of the end of the accounting year. For most companies with a March year-end, that means by 30 November 2026 for 2025-26. It is taxed like any other salary.
After the bonus
- Check your payslip: the bonus and the TDS on it should both appear.
- In January, compare your total TDS with your estimated tax. If you have other income (interest, rent, capital gains), you may also need to pay advance tax by 15 December.
- When you file, match your return with Form 130 (the new Form 16) and your AIS.
How Vitt-Marg helps
We are in Sector 63, Noida. We compare the old and new regime with your bonus, plan NPS and other options with your payroll team, and file your return. For employers, we review bonus and gift policies for TDS. See our ITR filing services in Noida.
General information, current as of October 2026, not advice for a specific case. GST and income-tax rules change often — check with us before acting on it.