Financial advisor Jitendra Solanki from Ghaziabad has shared advice regarding the financial management of Diwali bonuses. Bonuses are considered windfall income, which is received in addition to regular monthly income.

tax implications on festival bonuses

For salaried individuals, a bonus received from a company is included in salary income and falls under the tax net. The tax on a bonus depends on the total annual taxable income and the applicable tax regime.

applying the 70:20:10 budget rule

Budget rules such as 70:20:10 can be utilized for bonus allocation. Illustrating this with an example of a twenty thousand rupee bonus, it suggests fifteen thousand rupees for an emergency fund, three thousand rupees for long-term investment, and two thousand rupees for festival expenses. However, there is no fixed or mandatory rule for spending a bonus.