Tax on a ₹3 lakh bonus: what you keep at five salaries

The same ₹3 lakh, five different tax bills

Two colleagues get the same ₹3 lakh bonus in November. One keeps all of it. The other hands over more than a third. Neither is being treated unfairly: the tax system has a cliff, and where your salary sits relative to it decides almost everything.

This post works the numbers for FY 2026-27 under the new regime. It uses the slabs, the ₹75,000 standard deduction and the section 87A rebate set out in our old vs new regime comparison, with the 4% cess included and surcharge left out (it begins at ₹50 lakh of income).

The rules used

• Taxable income = gross salary − ₹75,000 standard deduction.
• Slabs: nil to ₹4 lakh, 5% to ₹8 lakh, 10% to ₹12 lakh, 15% to ₹16 lakh, 20% to ₹20 lakh, 25% to ₹24 lakh, 30% above.
• Tax is nil if taxable income is ₹12 lakh or less. Just above that, marginal relief caps the tax at the amount by which income exceeds ₹12 lakh.
• 4% health and education cess on the tax.

The bonus is treated as ordinary salary for the year, so the only question is how much extra tax the year's total produces.

What ₹3 lakh is worth at five salaries

Each row is a subtraction of two full-year tax bills, so you can check one yourself. Take the ₹20 lakh row. Before the bonus, taxable income is ₹19.25 lakh: ₹1,20,000 on the first ₹16 lakh plus 20% of ₹3.25 lakh (₹65,000) is ₹1,85,000, and with cess ₹1,92,400. After the bonus, taxable income is ₹22.25 lakh: ₹2,00,000 on the first ₹20 lakh plus 25% of ₹2.25 lakh (₹56,250) is ₹2,56,250, and with cess ₹2,66,500. The difference is ₹74,100.

Why the ₹12.75 lakh row is the odd one

At ₹8 lakh the bonus is free because the whole year still fits under the rebate limit: ₹11 lakh of gross salary is ₹10.25 lakh of taxable income.

At ₹12.75 lakh the picture flips. Taxable income before the bonus is exactly ₹12 lakh, so tax is nil. The bonus takes it to ₹15 lakh. The rebate is gone, and the slabs apply to everything:

• ₹4–8 lakh at 5% = ₹20,000
• ₹8–12 lakh at 10% = ₹40,000
• ₹12–15 lakh at 15% = ₹45,000

That is ₹1,05,000, or ₹1,09,200 with cess. Of that, ₹60,000 (before cess) is tax on the first ₹12 lakh that the rebate used to wipe out. The bonus is paying for the lost rebate as well as its own slab, which is why the effective rate on it, 36.4%, is higher than the top rate of 31.2%.

The effect is sharpest for a smaller bonus. A ₹50,000 bonus at the same salary takes taxable income to ₹12.5 lakh, where marginal relief limits the tax to about ₹50,000 before cess. The bonus is then taxed at close to 100%. The relief zone ends at roughly ₹12.7 lakh of taxable income; past it the ordinary slab calculation is lower than the cap, which is why the ₹3 lakh bonus escapes the cap.

Why it feels worse than the table

Payroll deducts tax on projected annual income. In the month the bonus arrives, TDS is recalculated, and the deduction for that month can look enormous because it catches up for the months before the bonus was known. The annual total is what matters, and the table shows it. Any excess TDS comes back as a refund when you file; a shortfall is due as tax with your return.

What to take from it

• Below the rebate limit, bonuses can be nearly free. At ₹8 lakh the whole bonus passed untaxed. If your salary sits well under ₹12 lakh of taxable income, a bonus may cost nothing.
• Just over the limit, a bonus can cost more than the top slab. The ₹12.75 lakh row is a rebate-cliff effect, not a rate change. If your salary is near that point, the size and timing of a bonus matters.
• In the middle slabs the effective rate is the marginal slab plus cess. ₹15 lakh and ₹20 lakh show 17.8% and 24.7%, blends of the 15%, 20% and 25% slabs with cess.
• At ₹30 lakh it is the flat top rate. Everything is in the 30% slab, so 31.2% with cess.

If your employer allows it, an employer NPS contribution of up to 14% of basic plus DA is deductible under the new regime, so part of a bonus routed that way is taxed differently. Ask your payroll team whether it is offered and what it does to your take-home. This is a description of a rule, not advice to use it.

You can reproduce any row with the income tax calculator or compare regimes with the old vs new regime calculator.

All figures are worked from the FY 2026-27 new-regime rules as set out above, for illustration. They exclude surcharge, other income and any deductions beyond the standard deduction. Check your own position with a tax professional.