Under Circular 164,

• IIT on annual one-time bonus may be calculated without aggregating it with one’s comprehensive income, and based on the marginal tax rate applicable to 1/12 of the annual one-time bonus amount (the marginal tax rate varies depending on the quantum of income, so this calculation approach lowers the marginal rate applicable);
• IIT related to equity-based incentives is calculated separately from the taxpayer’s other comprehensive income and is subject to tax at the applicable (annual) marginal tax rate, provided however that the equity-based incentives are recognized by the tax authority and for such purpose filings/registrations under Circular 35 are required.