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I recently won an award at my workplace that includes cash as well - is it taxable?

In the interpretation of the Income Tax laws in India, an award received by an employer can be considered to be a gift from the employer. Any gift received by the employee above the exemptions set by the Income Tax Department in the country is taxable. 

According to Section 17(2)(viii) of the Income Tax Act, 1961, any gift or reward received from the employer over an amount of ₹ 5,000 is to be taxed as compensation in the hands of the professional. In such an instance, the employer should ideally deduct TDS from your monthly compensation equal to the amount of the gift that is provided. 

It is quite common for companies in India to provide gifts to their employees in the form of vouchers or material items to mark various festivals or social occasions be it Diwali, New Year, birthdays or marriage anniversary of employees etc. Gifts that are given for these intents but below the value of ₹5,000 per person are tax-exempt, according to the Income Tax Act. However, if the value of the gift is more than ₹5,000, it is liable to be taxed as a perk received from the employer. 

For employees, it is recommended that they keep a record of any such gifts or award received from the employer as they might be required to furnish that information when filing tax returns later in the year or on the demand of the tax authorities.

It is to be remembered that the tax exemption discussed above for gifts received by employees is only for organization-wide gifts given by the employer in the same range of cost to all the workers. However, any gift given to an employee or a group for their excellent performance or positive contribution to work will be liable to taxation. This is because the reward given for performing well at work is considered compensation instead of a gift which will be liable to be taxed irrespective of the actual amount of the gift/award thus received. 

For example, Roshan is working at a small consultancy service in Delhi. After the annual reports for last year, his company earned the highest profit in history. So they decide to give a bonus to every employee worth ₹ 5,000/- in a gift voucher. This is not taxable. However, if Roshan had received an award for being a star performer and received ₹20,000 in cash, that would be subject to taxes. 

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