Can You Save Tax on Diwali Shopping or Bonus? Here’s What the Income Tax Rules Actually Say

As the festive lights of Diwali approach, shopping sprees are in full swing across India. From gold and gadgets to clothes and home décor, consumers are indulging in grand purchases to celebrate the festival of prosperity. But amid the festive cheer, many people are also wondering — Can Diwali expenses help save tax? Are gifts and bonuses received during this season taxable? Let’s break down what the Income Tax rules say about this.

No Tax Benefit on General Diwali Shopping

While Diwali is one of India’s biggest shopping festivals, ordinary festive purchases do not qualify for any tax deductions under the Income Tax Act. Whether you spend on sweets, clothes, home decorations, or electronics, these are all considered personal expenses, not eligible for tax exemption.

That means you cannot claim any tax benefit simply for Diwali-related spending, no matter how significant the amount is. The only exception applies if such expenses are directly linked to your business — for instance, if you buy gifts for clients or customers as part of professional expenses, you may be able to claim them as business deductions under certain conditions.

Gifts: When They Become Taxable

According to Section 56(2)(x) of the Income Tax Act, gifts received without consideration (meaning without giving anything in return) are taxable if their total value exceeds ₹50,000 in a financial year.

If the total amount of gifts — whether in cash or kind — received from non-relatives during a financial year crosses ₹50,000, the entire value becomes taxable as “Income from Other Sources.”

However, if the total gift amount is ₹50,000 or below, it remains completely tax-free.

Who Qualifies as a “Relative”?

The law provides clear exemptions for gifts received from relatives. These include:

• Parents and siblings

• Spouse (husband or wife)

• Siblings of the spouse

• Brothers and sisters of either parent

• Lineal ascendants and descendants (such as grandparents, children, and grandchildren)

• Spouses of the above relatives

Any gift received from these relations is fully exempt from tax, irrespective of its value. So, gifts from family during Diwali — like jewelry, cash, or gold — will not attract any tax.

Diwali Bonus Is Taxable Income

Many employees receive a Diwali bonus as part of festive incentives. However, this bonus is not tax-free. It is treated as part of your salary income and taxed according to your applicable income tax slab.

For instance, if your employer gives you a ₹20,000 Diwali bonus, it will be added to your annual salary, and you’ll be taxed on it just like your regular income. There is no special exemption for Diwali or festive bonuses under current tax laws.

What About GST 2.0 and Price Benefits?

The festive season this year comes with another development — the government’s implementation of GST 2.0 from September 22, 2025. The new structure has reduced prices on several consumer goods, potentially boosting spending across categories. Sellers are also offering massive discounts and cashbacks, making it a great time for shoppers.

While these offers can help you save money directly, they don’t translate into income tax benefits — they simply make purchases more affordable.

Bottom Line

While Diwali brings prosperity and celebration, it doesn’t bring direct tax savings on your shopping or gifts — unless they fall within specific exemptions or business expenses.

However, understanding how gift taxation and bonus income work can help you stay compliant and avoid surprises during tax filing season. Gifts from relatives remain tax-free, while those from non-relatives beyond ₹50,000 become taxable. Diwali bonuses, on the other hand, are fully taxable as part of your salary.

So this festive season, go ahead and shop guilt-free — just remember, when it comes to taxes, the lights may shine bright, but the rules remain clear.

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