Analysis of Union Budget 2017 provisions of Income Tax Service Tax Excise Duty Custom Duty with Budget Highlights Commentary Speech, Notification, News & Articles.
Applicability of Act (Sec 1)
Every factory wherein 10 or more persons are employed with the aid of power or An establishment In which 20 or more persons are employed without the aid of power on any day during an accounting year.
Establishment : Establishment includes departments, undertakings and branches, etc.
Computation of available surplus (Sec.5) : The following sums shall be deducted from the gross profits as prior charges, namely:-
(a) any amount. by way of depreciation admissible in accordance with the provisions of sub-section (1) of section 32 of the Income-tax Act, or in accordance with the provisions of the agricultural income-tax law, as the case may be:
Provided that where an employer has been paying bonus to his employees under a settlement or an award or agreement made before the 29th May, 1965, and subsisting on that date after deducting from the gross profits notional normal depreciation, then, the amount of depreciation to be deducted under this clause shall, at the option of such employer (such option to be exercised once and within one year from that date) continue to be such notional normal depreciation;
(b) any amount by way of 2[development rebate or investment allowance or development allowance] which the employer is entitled to deduct from his income under the income-tax Act;
(c) subject to the provision of section 7, any direct tax which the employer is liable to pay for the accounting year in respect of his income, profit and gain during that year;
Components of Bonus :- Sec. 2(21) : Salary or wages includes dearness allowance but no other allowances e.g. over-time, house rent, incentive or commission.
Separate establishment (Sec. 3) : I profit loss accounts are prepared and mainland in respect of any such department or undertaking or branch, then such department or undertaking or branch is treated as a separate establishment.
Disqualification and Deduction of Bonus : Sec 1 :
• On dismissal of an employee for fraud; or
• riotous or violent behaviour while on the premises of the establishment; or
• theft, misappropriation or sabotage of any property of the establishment; or
• Misconduct of causing financial loss to the employer to the extent that bonus can be deducted for that year.
Computation of gross profits : For banking company, as per First Schedule. Others, as per Second Schedule.
Eligibility of Bonus : An employee will be entitled only when he has worked for 30 working days in that year. Sec. 8
Payment of Minimum Bonus : 8.33% of the salary or Rs.100 (on completion of 5 years after 1st Accounting year even if there is no profit). Sec. 10
Eligible Employees: – Employees drawing wages upto Rs.10000/- per month or less. For calculation purposes Rs.3500 per month maximum will be taken even if an employee is drawing upto Rs.3500 per month. (Sec. 12)
Time Limit for Payment of Bonus : Within 8 months from the close of accounting year. (Sec. 19)
Set-off and Set-on : As per Schedule IV. Sec. 15
Submission of Return : In Form D to the inspector within 30 days of the expiry of time limit under Section 19. Rule 5
Maintenance of Registers and Records etc. Sec. 2(21) :
• A register showing the computation of the allocable surplus referred to In clause (4) of section 2, in Form A.
• A register showing the set-on and set-off of the allocable surplus, under section 15, in Form B.
• A register showing the details of the amount of bonus due to each of the employees, the deductions under sections 17 and 18 and the amount actually disbursed, In Form C.
Non applicability of the Act: – Act not applicable to certain employees of LIC. General Insurance, Dock Yards, Red Cross, Universities* Educational Institutions, Chambers of Commerce, Social Welfare Institutions. etc. Sec.32
Penalty : For contravention of any provision of the Act or the Rules: Upto 6 months or with fine upto Rs.1000. Sec.28