Understanding Bonuses: Are They Really a Benefit or Just Another Deduction?

Understanding Bonuses: Benefit or Deduction?

Is a bonus considered a benefit or a deduction? How can a bonus be added to annual income? For whom will the bonus be added?

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Hi Savitha, bonus is added to the income. Even bonuses are part of income, and TDS is applicable on the same. Bonuses are added for all the employees who are receiving bonuses from the company.

A bonus is part of the salary, i.e., salary includes all pay, allowances, bonus, perquisites, commission, etc. As per the provisions of the Income Tax Act, 1961, the amount of compensation due or received by an employee from their employer in connection with employment shall be taxable as salary in the hands of the employee. Accordingly, the bonus receivable by you shall be taxable in your hands as salary income.

Regards,
Narayan
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