Windfalls3 min read · Updated 21 October 2026
Got a lump sum? What to do with ₹25 lakh in India
A sensible order for a bonus, ESOP sale, inheritance or property sale in India: cushion, card debt, then PPF, NPS and index funds, with a worked example.
Pause first
Put the whole amount in an easy-access account for a few weeks. No decision is urgent, and grief or excitement is a poor time for big ones.
A sensible order
- Fill your cash cushion: three to six months of essential costs.
- Clear expensive debt. Credit card and personal loan debt at 24% to 36% should go first.
- Pay down cheaper debt if the rate is above what you can safely earn.
- Put the rest to work: PPF, NPS, an EPF top-up or low-cost index funds.
A worked example
You receive ₹25 lakh with ₹1.5 lakh in cash and ₹60,000 a month of essentials. Six months is ₹3.6 lakh, so the cushion needs ₹2.1 lakh. A ₹20,000 credit card at 36% is cleared. The remaining ₹22.7 lakh goes to PPF, NPS and index funds.
Check the tax
A bonus is taxed as salary. Long-term capital gains on equity above ₹1.25 lakh are taxed at 12.5%. Gifts from relatives are exempt, and inheritance is not taxed in the hands of the heir. Check the rules for your case.
Common questions
Should I clear debt or invest first?
Clear debt that costs more than you can safely earn from investing, after keeping a cash cushion.
How big a cushion do I need?
Three to six months of essential costs.
Is a windfall taxed?
It depends on the type. Inheritance, a bonus and a house sale are treated differently. Check before spending.