Is Your Bonus Taxable? Seeking Clarity on Tax Implications

Dear friends,

Can anyone please let me know whether the bonus amount is taxable? I'm eagerly waiting for your response.

Thanks,
Binzy

Hi,

Bonus is taxable income. We have to pay income tax on bonuses as per guidelines.

Regards,
Ramakrishna

What Prashant is saying is not clear and may lead to confusion for new joiners in HR.

PF cannot be deducted or paid from bonus. It is not covered under the definition of pay.

KKT

Dear Friends,

Thanks for your input. I wanted to clarify this because a couple of our employees argued with me that in their previous company, they were given separate cheques for their bonus amount, and there were no deductions made.

I was confused. Now I'm sure that it's taxable (as it's followed in my company). Thanks for your clarification.

Binzy

Out of curiosity, as I am in Australia, we need to pay superannuation on a bonus (Tax is taken out on the core bonus amount and not the superannuation component).

Does this also apply to the countries in which you are located?

Out of curiosity, as I am in Australia and we need to pay superannuation on a bonus (Tax is taken out on the core bonus amount and not the superannuation component).

Does this also apply to the countries in which you are located?

Dear Mserica,

In India, superannuation is not payable on bonuses; therefore, the full bonus becomes taxable. However, some companies do deposit up to 15% of the basic salary of employees into a superannuation fund with insurance companies in the name of the employees. These contributions are not taxable up to Rs. 100.00 thousand in a year.

KKT

Dear KKT,

Bonus is not taxable; as such, the component of bonus is very small and is not taxable. As per the law, the maximum limit for bonus is 3500 basic salary of the employee. Therefore, a person who is receiving a basic salary of Rs. 3500 and if the DA component is not included, his actual salary will not exceed the taxable limit.

However, the taxability of bonus depends on the company's policies. Yes, bonus is taxable as it is a part of the CTC salary, and in the annual return, you are required to declare it as income. Therefore, it is taxable.

SS