Taxing Performance Bonuses: Is There a Way to Make Them Non-Taxable?

Dear Sir,

Performance bonus and incentives are taxable. Is there any clause that can make it non-taxable? Kindly guide.

This cannot be made non-taxable as per any clause. We need to follow the Income Tax provisions.

As per Indian tax laws, bonus and incentives in kind paid to the employees could be considered as salary income in the hands of the employees.

"Any performance bonus and incentives due to the employee from the employer, whether paid in cash or in kind, are taxable in the hands of the employees as salary income, and the employer has to withhold taxes at source.

If a performance bonus or incentive is declared in cash and subsequently disbursed in cash or kind, the entire amount would arguably be subject to being fully taxable.

Regards, Amit