The tax deducted from a bonus is your slab rate on it: in the 30% slab under the new regime for FY 2026-27 that is 31.2% with cess, so a ₹3,00,000 bonus at a ₹25 lakh salary loses ₹93,600. Your employer collects it as TDS within the same year, so a March bonus shows it all in one payslip, and a bonus that takes your income past ₹50 lakh can lose more than half, because surcharge then applies to the whole year's tax.
How much tax is deducted from a bonus, and when?
There is no separate bonus tax. A bonus is salary for the year it is due or paid, whichever is earlier, and it is taxed from the slab your salary has already reached. Here "salary" means gross salary, before the ₹75,000 standard deduction, not CTC.
Your employer deducts TDS on a bonus under section 392 of the Income-tax Act, 2025 (section 192 of the 1961 Act). It estimates your salary for the whole year, including a bonus once it is declared, and deducts at the average rate. Many employers take the extra TDS in the payout month; some spread it over the months left. A March bonus has only one month either way.
Other income or a previous employer's salary reaches that estimate only if you declare it in Form 122, which replaced Forms 12B and 12BAA from 1 April 2026, as two Form 16s in one year explains.
The ₹50 lakh line is tested on total income: salary, bonus and any other income such as interest or gains, not salary alone. The surcharge above ₹50 lakh is 10% of the whole tax, which is why a ₹5,00,000 bonus at a ₹48 lakh salary costs ₹2,75,340, or 55.1%, as worked below. Salary TDS covers the bonus itself, so only that other income can call for advance tax.
Why is TDS so high in the bonus month?
Sameer's gross salary is ₹25,00,000. After the ₹75,000 standard deduction his taxable income is ₹24,25,000. Under FY 2026-27 new-regime slabs, tax up to ₹24 lakh is ₹3,00,000, and 30% on the last ₹25,000 adds ₹7,500: ₹3,07,500, or ₹3,19,800 with 4% cess. His employer deducts ₹26,650 a month.
In March he gets a ₹3,00,000 bonus. All of it sits above ₹24 lakh, so it is taxed at 30%, ₹90,000, or ₹93,600 with cess. March TDS, his usual ₹26,650 plus ₹93,600 of TDS on bonus, becomes ₹1,20,250.
That jump is timing, not extra tax. His tax for the year is ₹4,13,400, and the bonus is taxed at exactly 31.2%. Paid in October by an employer that spreads TDS, the same ₹93,600 would have come off six payslips at ₹15,600 each. He keeps ₹2,06,400, the figure variable pay after tax gives for a bonus wholly in the 30% slab. What to do with my annual bonus sets an order for spending it.
What happens when a bonus crosses ₹50 lakh?
Sameer's manager Mahima, on a gross salary of ₹48,00,000, gets a ₹5,00,000 bonus. Her total income becomes ₹52,25,000. Slab tax is ₹11,47,500, and because income now exceeds ₹50 lakh, a 10% surcharge adds ₹1,14,750 on the whole of it, salary included. With cess, her year's tax is ₹13,12,740, against ₹10,37,400 without the bonus. The bonus costs ₹2,75,340, or 55.1%.
Marginal relief does not reach her. It caps tax plus surcharge at the tax on ₹50 lakh (₹10,80,000) plus the income above ₹50 lakh: ₹13,05,000 here, more than her tax plus surcharge of ₹12,62,250. It bites only between ₹50 lakh and about ₹51.6 lakh of income, where the whole slice above the line goes in tax and cess takes a little more: at ₹50.5 lakh, the ₹50,000 above it costs ₹52,000.
Her March TDS is her usual ₹86,450 plus ₹2,75,340: ₹3,61,790. The same bonus at other gross salaries, new regime, FY 2026-27:
| Gross salary | Income with bonus | Tax on the bonus | Share lost |
|---|---|---|---|
| ₹18 lakh | ₹22,25,000 | ₹1,15,700 | 23.1% |
| ₹25 lakh to ₹45 lakh | ₹29,25,000 to ₹49,25,000 | ₹1,56,000 | 31.2% |
| ₹46 lakh | ₹50,25,000 | ₹1,74,200 | 34.8% (marginal relief) |
| ₹47 lakh | ₹51,25,000 | ₹2,47,000 | 49.4% (marginal relief) |
| ₹48 lakh | ₹52,25,000 | ₹2,75,340 | 55.1% |
| ₹50 lakh | ₹54,25,000 | ₹2,81,580 | 56.3% |
| ₹55 lakh | ₹59,25,000 | ₹1,71,600 | 34.3% |
Once income before the bonus is past about ₹51.6 lakh (about ₹52.4 lakh gross), the full surcharge is already paid on the salary, so the bonus costs 30%, plus a 10% surcharge on that tax, plus cess: 34.3%, until income passes ₹1 crore.
Can you save tax on a bonus?
In the new regime, the main deduction left is an employer NPS contribution, up to 14% of basic plus DA under section 80CCD(2) of the 1961 Act. Had ₹2,25,000 of Mahima's pay gone to NPS this way, which needs an employer that offers it and a basic plus DA of at least ₹16,07,143, her income would have been ₹50,00,000, with no surcharge, and her tax ₹11,23,200: ₹1,89,540 less, with that money held in NPS. The NPS guide sets out the limits and the lock-in.
In the old regime, your employer counts deductions toward TDS only if you prove them in Form 124 (was Form 12BB); anything unproved comes back as extra TDS in February and March, on top of a March bonus, and you claim it back in your return, as missed investment proofs works out.
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Frequently asked questions
This is general information for salaried individuals in India, not personalised financial advice.
