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Bonus is not part of salary then how can company do this? medianet_width=’300′; medianet_height= ‘250’; medianet_crid=’573762416′; Thank you, it was helpful
June 23, 2016 at 10:30 am Rohit says medianet_width=’728′; medianet_height= ’90’; medianet_crid=’862264380′; At the end of the year employees will be receiving form 16 for the entire amount including the bonus components and they just need to compare their tax liability with the TDS that has been deducted. If they find everything fine then tax return can be filled with tax department or else for lesser deduction of tax employee has to pay tax to the department and for higher deduction of tax employee will be claiming refund from IT department. Employers have to deduct tax as they deduct it in the case of employee’s salary. However tax rates on your bonus depends on your tax bracket. If adding this bonus component to your salary takes you from a lowed slab rate to a higher slab rate then higher tax rate will be applicable to you. For example; if the employee’s taxable income is Rs. 4, 90,000 then he is coming under the slab rate of Rs. 200000-500000 considering his age below 60 years. With annual bonus of Rs. 25, 000 employee’s income jumps from Rs. 4, 90,000 to Rs. 5, 15,000 by which such employee needs to pay tax at the rate of 20% on Rs. 15, 000 as this income comes under the slab rate of Rs. 5, 00,000 to Rs. 10, 00,000.
Last Modified on May 8, 2014 by Editorial Staff These bonuses can have many components like it can be based on employee’s performance or industry performance or team performance. It can be a mixture of all these. Whatever be the way of calculating bonus, the tax calculation for all these will be the same. medianet_width=’600′; medianet_height= ‘250’; medianet_crid=’486579464′; Editorial Staff at Yourfinancebook is a team of finance professionals. The team has more than a decade experience in taxation and personal finance. Income Tax | Finance | Investing | Accounting | Career
Comment akash says Employer will add the bonus amount to your salary income and calculate income tax on the entire salary income by taking your tax deductions and other income as declared by you. Then the income tax will be divided by 12 to find out the tax liability per month that needs to be deducted from your monthly salary. While doing so if bonuses are received in the middle or at the end of the month then the extra tax as calculated in the above manner will be divided by the months that is left out and income tax per month as calculated will be deducted from your salary income. Save my name, email, and website in this browser for the next time I comment. May 27, 2015 at 12:11 pm