Diwali 2026 falls on Sunday, 8 November 2026. If you run payroll, that means the bonus question lands on your desk in October: who gets it, how much, and whether the law says anything about it.
Short answer: the festival bonus is a custom, but the statutory bonus is law, and most Indian employers pay the statutory amount around Diwali. Use our bonus calculator to check a number, or read on for the rules.
When do companies pay the Diwali bonus?
There is no legal "Diwali bonus date". In practice:
- Most companies pay it with the October salary (paid end of October or first days of November), so employees have it before 8 November.
- Some pay it as a separate payout in the first week of November.
- The legal deadline for the statutory bonus is different: it must be paid within eight months of the close of the accounting year. For an April–March year that is 30 November.
HR, GPS attendance, shifts, leave, payroll, tax declarations, onboarding, engagement, projects and timesheets — one employee record behind all of it.
Start free See the demoThe 8.33% rule
Statutory bonus was governed by the Payment of Bonus Act, 1965. Since 21 November 2025 it sits under the Code on Wages, 2019, and the core numbers carried over:
| Rule | Value |
|---|---|
| Minimum bonus | 8.33% of calculation wages, or ₹100, whichever is higher |
| Maximum bonus | 20% of calculation wages |
| Eligibility wage ceiling | Monthly wages of ₹21,000 or less |
| Calculation ceiling | ₹7,000 a month, or the minimum wage for the lowest grade, whichever is higher |
| Minimum service | 30 working days in the accounting year |
Rules under the Code are still being notified in some states, so confirm the current thresholds with your compliance advisor before you lock the payout.
Worked example
Priya earns ₹18,000 a month and worked the full year. Her employer pays the minimum statutory bonus. The state minimum wage for her grade is below ₹7,000, so the ₹7,000 ceiling applies.
- Calculation wage: ₹7,000 × 12 = ₹84,000
- Bonus at 8.33%: ₹84,000 × 8.33% = ₹6,997
- At the 20% maximum: ₹84,000 × 20% = ₹16,800
Raj earns ₹32,000 a month. He is above the ₹21,000 ceiling, so he is not entitled to statutory bonus. Anything he receives is a discretionary festival bonus at the company's choice.
For a deeper walk-through of proration for partial years and joiners, see Diwali bonus calculation.
Statutory bonus vs festival bonus vs gift
| Statutory bonus | Discretionary festival bonus | Diwali gift | |
|---|---|---|---|
| Legally required? | Yes, for eligible employees | No | No |
| Fixed formula? | 8.33%–20% of calculation wages | Company decides | Company decides |
| Taxable for employee? | Yes | Yes | Gifts in kind above the exempt limit are taxable as a perquisite |
Payroll checklist before Diwali
- Pull the list of employees at or below ₹21,000 monthly wages.
- Prorate for employees who joined during the year.
- Decide the percentage (8.33% minimum, up to 20%) and get it approved.
- Add the bonus as a separate earning head so it shows clearly on the salary slip.
- Recompute TDS for the month.
- Send the payout note to employees in advance — a short WhatsApp message works better than an email nobody reads.
If you run payroll in MizUp, bonus is just another earning head on the payroll run, and the payslip and TDS update with it. See MizUp HR and payroll.
Rules summarised from the Code on Wages, 2019 (effective 21 November 2025) and the former Payment of Bonus Act, 1965. This is general information, not legal advice.
Frequently asked questions
When is Diwali in 2026?
Diwali (Lakshmi Puja) falls on Sunday, 8 November 2026. Most companies pay the bonus with the October salary or in the first week of November.
Is Diwali bonus mandatory in India?
The festival bonus itself is a company practice. What is mandatory is the statutory bonus for eligible employees, now governed by the Code on Wages, 2019, which many employers choose to pay around Diwali.
What is the minimum bonus percentage?
The statutory minimum is 8.33% of the wages used for calculation, or ₹100, whichever is higher. The maximum is 20%.
Who is eligible for statutory bonus?
Employees whose monthly wages are ₹21,000 or less and who have worked at least 30 days in the accounting year. Check for any newly notified changes to these thresholds.
Is Diwali bonus taxable?
Yes. A bonus is part of salary income and is taxed in the year it is received, and TDS applies through payroll.
