Find out exactly how much of your bonus you'll take home after TDS in India. Covers performance bonus, annual bonus, joining bonus, and ESOP vesting. Old vs new regime comparison included.
Many Indians are caught off guard when their ₹3L bonus results in only ₹2L in hand. In India, bonuses are treated as salary income and taxed at your marginal slab rate — not at a flat rate. Your employer is legally required to deduct TDS on the bonus amount at the time of payment.
Yes. In the old tax regime, maximise 80C investments (₹1.5L), 80D health insurance (₹25K–75K), NPS contribution 80CCD(1B) (₹50K), and HRA exemption before year-end. Ask your employer to defer part of the bonus to the next financial year if you expect lower income then. If switching to new regime, the lower slab rates may reduce your effective bonus tax.
If TDS is over-deducted (common when bonus pushes you into a higher slab temporarily), you can claim the excess back as an income tax refund when filing your ITR. Submit Form 12BB to your employer early in the year declaring all deductions — this helps them compute TDS more accurately and avoid over-deduction.
Performance bonus can be either. When negotiating, clarify: (1) Is the CTC figure inclusive of variable pay or is variable on top? (2) Is the variable pay a fixed amount or a percentage target? (3) What percentage of target has historically been paid? A "20% variable" in CTC = ₹2.4L variable on a ₹12L CTC — but if only 60% of target is typically achieved, actual is ₹1.44L.
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