Yes, it’s that vibrant time of year again – Diwali is here! In India, celebrations and festivals are woven into every corner of our calendar, from North to South, East to West. Diwali, the festival of lights, brings families and communities together, brightened by lights, firecrackers, sweets, and unforgettable moments. As always, we celebrate wholeheartedly, often splurging to make each festival special for our loved ones. But what about finances post-celebration? Have you ever felt the pinch after a festive season, realising you may have gone overboard? It’s a familiar story for many, myself included, where Diwali spending on everything from firecrackers to treats sometimes felt like too much – or, as my mother would say, “too sweet or too explosive!” As Diwali approaches, many Indian households start balancing their celebrations with financial planning. Bonuses and gifts bring extra income this season, making it a perfect time to focus on smart tax-saving strategies.

By investing wisely, leveraging exemptions, and staying updated on tax law changes, you can manage your tax responsibilities effectively and prevent any surprises at the end of the financial year. Here’s your guide to navigating tax planning and enjoying a financially best Diwali! How much GST you will pay on Common Diwali Purchases During Diwali, consumers typically purchase a variety of items, from sweets and gifts to firecrackers and decorative items. Here’s a look at the GST rates applicable to common Diwali purchases: Sweets and Snacks: Generally attract a GST rate of 5%. Gifts: Most gifts, including dry fruits and chocolates, are subject to 12% or 18% GST, depending on the product. Firecrackers (Patakas): Classified under Chapter 36, firecrackers attract a hefty GST rate of 28%. This is one of the highest tax brackets, reflecting the government’s attempt to regulate usage for environmental reasons. Diwali Decorations: Items like diyas, decorative lights, and flowers usually fall under the 12% to 18% GST category.

For example, if you purchase ₹1,000 worth of firecrackers, your GST liability will be ₹1,000 * 28% = ₹280. HOW TO SAVE ON GST Strategize Your Shopping: Plan purchases thoughtfully to reduce tax impact. Buying in bulk can be a smart approach to keep GST-related costs lower. You can team up with some friends or family and buy things. Consider Local Vendors: Local shops may provide competitive pricing with good quality, often due to lower operational expenses, which can help you manage costs more effectively. Look for Festive Deals and Discounts:

Many retailers roll out special holiday offers; taking advantage of these deals along with applicable GST rates can lead to noticeable savings. Prioritise GST-Compliant Sellers: Always opt for vendors who are GST-compliant. This ensures you receive proper invoices and helps avoid potential legal issues tied to non-compliant transactions. HOW MUCH INCOME TAX WILL YOU HAVE TO PAY AFTER DIWALI If you are getting bonus, gifts..etc, definitely you need to pay the Income tax at the end of the year, while filing the Income tax returns. Bonuses from Employers: If you’re getting a Diwali bonus from work, this is taxable as part of your salary and is subject to the same tax bracket as your regular income.

The amount of tax will depend on your income slab, whether new or old regime. Gifts from Friends and Relatives: Cash or gift vouchers exceeding ₹50,000 from non-relatives (anyone other than your immediate family) are taxable as income under the “Income from Other Sources” category. Thus, be careful when receiving gifts from your friends. There is no threshold for taking gifts from a very immediate family member. Business or Self-Employed Income: For business owners and self-employed professionals, Diwali could bring in extra income. While this is fully taxable, claiming expenses related to business, such as client gifts, or employee bonuses, can help reduce taxable income. HOW TO SAVE YOUR MONEY FROM PAYING INCOME TAX Donate to Charity (Section 80G) : As Diwali is the festival of lights, let it be you shall be the light of someone’s life. From the part of the amount you spend for the celebration, you could donate to the charity.

This donation can be claimed as a deduction under Section 80G, depending on the type of charity. Use Health Insurance (Section 80D) : Take out a health insurance policy for yourself or family members to claim deductions under Section 80D. Deductible amounts range from ₹25,000 for self/family up to ₹50,000 for senior citizens. You can provide it as a gift for your parents. Gift to Family Members: Gifts to family members are exempt from tax, so consider distributing gifts wisely to reduce your taxable income. By planning your investments, deductions, and exemptions wisely, you can enjoy a financially finest Diwali and minimise tax liabilities.