Diwali Bonus! Uttar Pradesh, Rajasthan CMs announce ‘Special gift’ for state govt employees – Check details

As Diwali approaches, state governments in Uttar Pradesh and Rajasthan have announced substantial bonuses for government employees, offering a festive boost ahead of the celebrations. The announcements are expected to benefit millions of public servants across both states.

What are the Uttar Pradesh Diwali bonuses?

In Uttar Pradesh, Chief Minister Yogi Adityanath declared that a total of ₹1,022 crore will be allocated to provide Diwali bonuses to 14.82 lakh government personnel. Employees up to Pay Matrix Level-8 are set to receive bonuses of up to ₹6,908, calculated on the basis of 30 days’ pay.

“The decision reflects the government’s respect for employees’ dedication and aims to spread festive joy and enthusiasm among their families,” an official statement read.

Diwali onus: What is Rajasthan offering its employees?

Meanwhile, in Rajasthan, Chief Minister Bhajanlal Sharma announced an ad hoc bonus for approximately six lakh state government employees on the occasion of Diwali 2025. The bonus applies to those working at pay level L-12 or with a grade pay of ₹4,800 or less, with each eligible employee receiving a maximum ad hoc bonus of ₹6,774.

In a post on X, the Chief Minister wrote: "Special Gift for State Government Employees on the Occasion of Diwali! Our government, dedicated to good governance, has announced the provision of an ad hoc bonus for approximately 6 lakh employees on the auspicious occasion of Diwali."

He added: “This bonus will be given to those state government employees who are working at pay level L-12 or grade pay ₹4,800 and below salary scales. Each eligible employee will receive a maximum ad hoc bonus of ₹6,774. The benefit of this decision will also extend to employees of Panchayat Samiti and District Council.”

Are Diwali gifts tax-free?

Many employees wonder whether festive bonuses are exempt from tax. Small tokens of appreciation, such as sweets, clothes, or gadgets worth up to ₹5,000, are generally tax-free.

However, gifts above this threshold, including high-end electronics or jewellery, are fully taxable. Their total value is added to the employee’s annual income and taxed according to the applicable income tax slab, just like regular salary.

Are cash bonuses taxable?

Unlike small gifts, cash bonuses are always considered part of an employee’s salary. For example, a Diwali bonus of ₹30,000 will be added to the total annual income and taxed according to the individual’s income tax bracket.

There is no separate exemption for cash bonuses. Employees must include all cash bonuses in their Income Tax Return (ITR) to avoid notices from the tax authorities. In short: small gifts under ₹5,000 remain exempt, but any cash or high-value gifts above this limit are taxable.

Being aware of these rules ensures that employees can enjoy their Diwali celebrations without facing unexpected tax liabilities.