Bonus Tax Calculator India 2026
Calculate tax deducted from your bonus and find your actual in-hand bonus amount. Compare old vs new tax regime.
Bonus Details
Gross bonus amount before tax
Your existing annual salary
In-Hand Bonus (After Tax)
₹0
You receive 0.0% of gross bonus
Bonus Breakdown
Tax Slab Impact
Before Bonus
After Bonus
Annual Tax Impact
Bonus Composition
How to Reduce Tax on Bonus
Old Regime (With Deductions)
- ✓80C: Invest in PPF, ELSS, Life Insurance (max ₹1.5L)
- ✓NPS: Extra ₹50K deduction under 80CCD(1B)
- ✓80D: Health insurance premiums (up to ₹50K)
- ✓Home Loan: Interest deduction under 24(b)
New Regime (No Deductions)
- ✓Lower tax rates overall
- ✓No need to make investments
- ✓Better for incomes above ₹15L
- ✓Simpler tax filing
Understanding Bonus Taxation in India
Bonus is fully taxable as "salary income" under the Income Tax Act. It is added to your annual income and taxed at applicable slab rates. TDS is usually deducted at the time of payment.
How Bonus is Taxed
- Added to Salary: Bonus is part of your total taxable income
- Slab Rates Apply: Taxed at your marginal tax rate (5%, 20%, or 30%)
- TDS Deduction: Employer deducts TDS before paying bonus
- Higher Slab Impact: Large bonus may push you to higher tax slab
- ITR Filing: Must be shown in your Income Tax Return
TDS on Bonus
- Average Rate Method: TDS at your average tax rate for the year
- 30% TDS: Often applied for bonuses above ₹1 lakh
- Form 16: TDS details reflected in Form 16
- Refund Possible: Get refund if excess TDS deducted (file ITR)
Types of Bonuses
- Performance Bonus: Based on individual/company performance
- Diwali Bonus: Festival bonus (usually 1 month salary)
- Retention Bonus: To retain employees
- Joining Bonus: Given when you join a company
- Quarterly Bonus: Paid every quarter based on targets
Frequently Asked Questions
Is bonus taxed higher than salary?
No, bonus is taxed exactly like salary. It's added to your annual income and taxed at your marginal rate. However, if bonus pushes you into a higher tax slab, that portion will be taxed at the higher rate.
How much tax on ₹1 lakh bonus?
Tax depends on your total income. If you're in the 20% slab, you'll pay around ₹20,800 (including 4% cess). If in 30% slab, around ₹31,200. Use our calculator for exact amount.
Can I avoid tax on bonus?
You cannot avoid tax on bonus, but you can reduce it by claiming deductions under 80C, 80D, NPS, etc. in the old tax regime. Choose the regime that gives you lower overall tax.
What is the TDS rate on bonus?
Employers typically deduct TDS at your average tax rate or 30% (for large bonuses). The exact rate depends on your projected annual income and tax slab.
Should I choose old or new regime for bonus?
Choose old regime if you have significant deductions (80C, home loan, NPS). Choose new regime if you don't have deductions or earn above ₹15L. Our calculator shows comparison for both.
Do I need to show bonus in ITR?
Yes, bonus is part of your salary income and must be shown in your Income Tax Return. It will be pre-filled from your Form 16.
What if excess TDS was deducted?
You can claim refund when filing your ITR. The refund will be credited to your bank account after processing.
Is quarterly bonus better than annual bonus?
Tax-wise, both are the same. However, quarterly bonus gives you regular cash flow and may prevent you from jumping to a higher slab in a single month.
Can company give tax-free bonus?
Companies cannot give tax-free bonus, but they can help by providing tax-saving investment options or reimbursing investments made under 80C, NPS, etc.
How to maximize in-hand bonus?
Maximize deductions (if in old regime): invest ₹1.5L in 80C, ₹50K in NPS, pay health insurance. Consider switching to new regime if deductions are low.