Introduction
A well-timed bonus deferral can be a powerful tax-saving tool, especially under the revised Budget 2025 tax slabs. Whether you’re borderline eligible for a surcharge at ₹50 lakh+ or earning ₹7-8 lakh annually, pushing your bonus to the next financial year can significantly reduce tax outflow.
This article will explain:
How salary and bonus are taxed on a payment basis
How the new tax regime’s ₹12 lakh limit & surcharge threshold impact bonus deferral
Who benefits the most from deferring their bonus?
Step-by-step calculation examples
How Salary & Bonus Are Taxed: Understanding Payment Basis
Salary and bonus are taxed in the year they are received, not when they are earned. This means:
- If the bonus is paid in March 2025, it is taxed in FY 2024-25.
- If the bonus is paid in April 2025, it is taxed in FY 2025-26.
This distinction matters, as income tax slabs, surcharges, and exemptions are calculated yearly.
Revised Tax Slabs for FY 2025-26 (New Regime)
| Annual Income (₹) | Tax Rate (%) |
|---|---|
| Up to 4,00,000 | Nil |
| 4,00,001 – 8,00,000 | 5 |
| 8,00,001 – 12,00,000 | 10 |
| 12,00,001 – 16,00,000 | 15 |
| 16,00,001 – 20,00,000 | 20 |
| 20,00,001 – 24,00,000 | 25 |
| Above 24,00,000 | 30 |
Standard Deduction: ₹75,000 applies to salaried individuals.
Surcharge Slabs (For High Earners):
- ₹50 lakh – ₹1 crore → 10% surcharge
- ₹1 crore – ₹2 crore → 15% surcharge
Who Should Defer Their Bonus?
High-Income Earners Near ₹50 Lakh – If your current-year income is slightly above ₹50 lakh, deferring the bonus may help you avoid a 10% surcharge.
Middle-Income Earners (₹7-8 Lakh Salary) – If you defer your bonus for two years, your taxable income may remain below ₹7 lakh in one of the years, qualifying you for a zero-tax bracket under Section 87A.
Employees Moving to a Lower Tax Year – If you expect a pay cut, loss of job, or sabbatical next year, deferring the bonus to a lower-income year can help.
Those Switching from Old to New Tax Regime – If you switch to the new tax regime next year, the increased ₹12 lakh threshold can offer better tax savings on your deferred income.
Case Study 1: Avoiding 10% Surcharge by Deferring Bonus
Amit earns ₹48 lakh annually and expects a ₹4 lakh bonus in March 2025. If he receives the bonus in March, his total taxable income becomes ₹52 lakh, pushing him into the 10% surcharge bracket.
Scenario 1: Bonus Received in March 2025 (Same FY)
- Total Income = ₹48L + ₹4L = ₹52L
- Surcharge applies (10% on tax liability)
Scenario 2: Bonus Deferred to April 2025 (Next FY)
- FY 2024-25 Income = ₹48L (No surcharge)
- FY 2025-26 Income = ₹48L + ₹4L = ₹52L (New tax rates apply)
Deferring the bonus prevents a 10% surcharge in FY 2024-25.
Case Study 2: Earning ₹7-8 Lakh? How You Can Pay Zero Tax with Bonus Deferral
Ravi earns ₹7.2 lakh per year and expects a ₹2 lakh bonus in March. Under normal circumstances, his taxable income crosses ₹7 lakh, making him ineligible for the ₹7 lakh rebate under Section 87A.
Scenario 1: Bonus Received in March 2025
- Total Taxable Income = ₹7.2L + ₹2L = ₹9.2L
- Tax Payable = ₹20,000 (No 87A rebate as income exceeds ₹7L)
Scenario 2: Bonus Deferred to April 2025
- FY 2024-25 Income = ₹7.2L (Eligible for 87A rebate → Zero tax)
- FY 2025-26 Income = ₹7.2L + ₹2L = ₹9.2L (New tax rates apply)
By deferring, Ravi pays zero tax in one year and significantly reduces his tax in the next.
How to Request a Bonus Deferral?
Check Employer Policy – Not all companies allow deferring variable pay. Ask HR by January or February.
Ensure Payment Happens in April – The actual bank credit date matters, not when the bonus is “allocated.”
Review Next Year’s Taxable Income – Make sure your income next year doesn’t push you into a higher tax bracket.
Use in Combination with Tax Planning – Consider NPS, 80C, HRA, and standard deduction strategies to further optimize tax.
FAQs: Deferring Bonus & Tax Planning
Q1: Can I defer my monthly salary to the next year?
No, monthly salaries must be paid and taxed monthly. Only bonuses and incentives may be deferred if your employer allows it.
Q2: What if my employer agrees to defer, but credits the bonus in March?
Your bonus is taxed on payment, not on agreement. Ensure it is actually credited in April.
Q3: Can I defer multiple years of bonuses together?
Yes! If your company allows, stacking bonuses for two years may let you qualify for the Section 87A ₹7 lakh rebate, making your income tax-free.
Q4: Will bonus deferral affect my Provident Fund (PF) or gratuity?
Bonuses don’t impact PF unless part of basic pay. Gratuity, however, may be impacted if linked to the last drawn salary.
Q5: What if tax laws change next year?
There’s always a risk of tax policy changes, so plan accordingly and monitor budget announcements.
Conclusion: Should You Defer Your Bonus?
Deferring your bonus is a smart tax-saving strategy, especially for high earners near the ₹50 lakh surcharge limit and middle-income individuals targeting the ₹7 lakh rebate.
Evaluate your salary structure, tax bracket, and employer flexibility to decide the best timing for your bonus payout.
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