• Mar
  • 13
  • 2012

Payment of Bonus Act, 1965 in brief

Posted In Corporate Law | | 60 Comments » Print Friendly and PDF

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


60 Responses to “Payment of Bonus Act, 1965 in brief”

  1. Honey says:

    plz give an example of sec3 so confusing

  2. MPANAIDU says:

    Dear Sir,

    We started a company in 2012. We have more than 20 members. Is any liability to pay BONUS to our employees.

    Regards,

    Naidu.Mamidi

  3. Ramen Goswami says:

    I am drawing a basic salary of Rs 7500/- inclusive of DA/VDA in a private company. Worked for 365 days . What amount of bonus I am entitled to.

  4. M. K. BHATT says:

    what should I have to pay minimum bonus to my employees if i am paying them above 3501/- and below 9999/-

  5. binay singh says:

    sir,
    we are contract workers working in ntpc power plant under upl.pl find us, what will be bonus at this f/y. our salary about 8500/-

  6. Merwin Dsouza says:

    I have worked in a pvt.ltd. company for six and half years and resigned on this year june 1st. Pls let me know that i am eligible for last year bonus..?

  7. Manojit Das says:

    Hi,
    I’ve worked in a pvt.ltd. company 28/06/2011 and resigned on 30.06.2013. I’ve received only one time bonus but they are saying that I’m not eligible for last year bonus. Pls let me know that am I eligible for last year bonus? If I’m eligible whom I will contact for the same? Are there any offices in the city of Kolkata of Howrah, pls let me know the office addresses.

    Pls help me what to do.

  8. ROHIT KILLEDAR says:

    sir,

    hi,

    please let me know whether we are eligiable to get bonus if co. is generating loss.what is the minimum celing of bonus. if any emplyee getting basic salary more than 10000 p.m. is he entitle to get bonus.

    rohit killedar

  9. rakesh mehra says:

    Hi
    Please let me know the bonus calculation as per bonus act , is it 8.33% of Basic + D.A.or only Basic.

    If employee getting basic salary above 10,000/- he is eligible or not and what the calculations of bonus as per act.

    Thanks

    Rakesh mehra
    rakesh2hr@gmail.com

  10. Sachin says:

    Please tell me that, bonus calculation as per labour law, is it 8.33% of Basic + D.A.or only Basic.

    If employee joining date is 1/6/2013 and his basic is Rs.5000/- D.A. Rs.1825.20/- then how we can calculate his Bonus which shall be paid in November’13.

  11. ROSHAN says:

    Hi,
    I had resign from my previous job on 24.06.2013. Please let me know that I am eligible for bonus from previous employer in F.Y 2013-14

  12. RAJU SINGH says:

    I WANT TO KNOW THE CALCULATION OF 30 WORKING DAYS, IT SHOULD BE ONLY WORKING DAYS OR INCLUDING HOLIDAYS OR WEEKLY OFF AS ONE OF OUR EMPLOYEE HAS JOINED ON 01.03.2013 AND DURING THE ACCOUNTING YEAR HE HAS WORKED ONLY FOR 25 DAYS + 5 WEEKLY OFF + 1 LEAVE = TOTAL 31 DAYS PAID TO HIM, IS HE IS ENTITLED FOR BONUS FOR THE YEAR 2013-2014

    IN OUR OPENION AS HE HAS WORKED ONLY FOR 25 DAYS INSTEED OF 30 DAYS HE IS NOT ENTITLED FOR BONUS.

  13. n j chary says:

    procedure for determination payment of bonus act, 1965

  14. Rakesh Patel says:

    Dear sir,

    Pl. let me know what to do with Dear Sir,
    pls tell us what is the treatment of unpaid bonus amount, as there is no mention about the unpaid bonus in the Act.

    Rakesh patel

  15. suresh says:

    Dear Sir,

    Please let me know, If I am getting per month Rs. 9400/- salary.

    How much bonus will be for 8 month.please calculate bonus for me for 8 Month.

    In my company is paying just double bonus to other staff, can they changed for a employees rules for the same.

    Please reply at the earliest

    thanks & regards

    My Mob No. 9035335480 & Email Id s.tailor2@yahoo.co.in

    Suresh

  16. kamlesh says:

    if any establishment has more then 20 persons in any days during a accounting year. and for a factory 10 or more
    the act will be applied this whether the number of persons reduced this will be applicable.

  17. Sankara Narayana S says:

    Hi,

    Please let me know,Is BONUS necessary to pay every year as per bonus act?

    I know that minimum bonus rate is 8.33% and maximum bonus rate is 20%. Is it correct?
    If establishment is made provision for bonus, is it mandatory to pay?

    Please suggest.

    Regards
    Sankara

  18. Venkat says:

    Will Bonus Act be applicable to employees of a Company registered u/s.25 of the Companies Act?

    Informatively, the said Company is running and educational institution.

  19. sanjay raut says:

    sir,

    Minium limit of bonus f.y 2012-13

  20. smrii says:

    Dear Sir,

    Please tell me that, what the rule & calculation of bonus against maternity leave.is there any deduction will be possible or not?

  21. smriti says:

    Dear Sir,

    please tell me know that, what is the calculation or rules for bonus against maternity leave. is there any deduction in my bonus or not.

  22. Rakesh rath says:

    DEAR SIR
    please tell me …when a contractor have 20 labour then he is able to pay bonous that”s a rule in lebour law or not please conform me…..

  23. mahesh says:

    Sir

    You have mentioned Rs.10000/ pm basic+da is the maximum amount to consider for calculation of bonus as per section 12.

    I am not able to find those words in the act.

    Can you please share it?

    Regards
    Mahesh

  24. umesh charanatimath says:

    sir,
    how much month can employee received his unpaid bonus ?

  25. Tamanna says:

    I worked for a company for 3yrs and resigned on 30 Apr. The company is withholding my performance incentives for this year as they say it need not be paid if you are not emplyed with the company when they are paying out bonus for that year. I compelted my appraisals before leaving and was told the amount will reflect in the F&F. I feel cheated and dont know who to approach. Pl guide me.

  26. sarvesh says:

    Dear Sir,

    please tell me about the bonus i want to know that if company in loss set off previous year then some loss carried forward next year what is applicale of bonus during the year.2011-12 

  27. Balasubramanian says:

    Dear sir,

    I have worked from jan 2011 to 8th nov 2011.Can i eligible to get the bonus for the year 2011.my salary was 48thousand per month.please reply.
    regards bala

  28. PALLAVI GAMBHIR says:

    hi sia,

    plz tell me whther teachers are included in this act or not??

    regards

    Pallavi

  29. jai says:

    PF deduction is mandatory only for an employer.. which is 10 percent of basic. in case of employee it is 10 percent.. however he can also contribute a higher rate.. it is his option..

  30. jaspal says:

    Case 1. As per the provision of section 19 of payment of bonus act 1965 bonus will be paid within eight months from the close of accounting year. in this case mr. X is entitled to receive bonus alongwith half month salary due on jun 15 and in this case salary will be due on jun 15

    Case 2. the company can not demand to receive back such bonus because Mr. X is entitled to bonus Irrespective of his Retirement.

  31. PRAMOD says:

    SIR,
    AS PER LATEST AMMENDMENT IN 2010 THE BONUS CEILING IS RS.10000/- I.E. EMPLOYEES WHOSE SALARY WILL BELOW OR EQUAL TO RS. 10000/- ARE ELIGIBLE TO GET BONUS. BUT I WANT TO CLEAR THAT THIS LIMITATION OF RS. 10000/- IS ON ONLY BASIC PAY OR INCLUDING DA. VDA. OR OTHER ALLOWANCES I.E. GROSS SALARY. PLEASE CLEAR IT.

    WITH REGARDS,
    PRAMOD KUMAR SAHU.

  32. Anamika says:

    Dear Sir

    I am Working with a new furnished Company as a HR Manager which has been started from Oct 2010. so i need some information about bonus act 1965. Sir is Bonus is Applicable to our Company also because we have completed only 9 months.

  33. Dharmendra says:

    Sir,

    some employees are eligible to get the bonus in a financial year but he has resigned during the year. after closing the financial year, company is liable to pay the bonus to eligible employees.but employees are not claim the bonus.

    let me know if bonus is not claim by the employees , what to do the unclaim bonus.

    Dharmendra

  34. deepa says:

    Upto what limit is PF Deduction mandatory?

    Regards

  35. deepa says:

    What is the minimum wage for bonus to be given compulsory. What is the recent rate of bonus?

  36. Hambir says:

    Need suggestion and help for the following cases

    1) Case 1:Mr X is working in a company for last 6 years. The compnay has declared bonus for the financial year end 2010-11. The letter is issued on 1st June that the payment of of bonus is will be credited on June salary (i.e 30th June. Now Mr X resigns on 15th June. Is he elligeible for Bonus or can the company deny Mr X from this Bonus?

    2) Case 2: Mr X resigns on 1st July after getting the bonus, can the company ask Mr X to pay back the Bonus? or can company hold all the facilities (final settlement, PF,etc) if Mr X does not refund the bonus?

    Please Help…
    Regards,
    Hambir

  37. SACHIN MALI says:

    1) MINUMUM WAGES FOR BANKING SOFTWARE COMPANY SKILL, TRAINEE

    2) MINUMUM BASIC + DA FOR BANKING SOFTWARE COMPANY

  38. SACHIN MALI says:

    1) AS PER BONUS ACT WHO IS NOT APPLICABLE TOTAL SALARY MORE THAN ?

    2) AND MINIMUM BONUS PAY BY EMPLOYER

  39. BHOOMI PATEL says:

    I WANT THE PROVISIONS OF BONUS IN BRIFE FOR PGDLP

  40. N.L.N.SWAMYT says:

    I NEED LATEST AMENDEMENTS IN PAYMENTS OF BONUS ACT DURING THE FINANCIAL YEAR

  41. chirag joshi says:

    I need a explanation regarding coloum 8 of the FORM -A of Bonus Return in computaion of the allocable surplus under section 2(4)of bonus act. ,1965

  42. anisha says:

    sir i am unable to understand the minimum bonus funda i.e,8.33% of the salary or RS100 on completion of 5 years after 1st a/cting year even if there is no profit.so plz tell me does it mean if there is no profit and employee has not been completed 5year on the job then he is not eligible for bonus if no profit is incurred .plz tell me that am i saying right or wrong.plz clarify my doubt.
    thanku

  43. s k meena says:

    Dear Sir,
    we have the unskilled labourer contract & the contractor is not paying the bonus because he is running the contract in loss. pl.advise.
    Thanks & Regards.

  44. Shailendra Prabhu says:

    Sir,
    I had joined Unity Infraprojects Ltd in October 2008 & resigned in October 2010. I request you am i eligible to get bonus for Financial year (2009 to 2010). Pl reply

  45. Tushar Patil says:

    Resected Seniors
    I want a description of current amendment of The bonus act,so please rply me.

    Thanks & Regards!!!

  46. G.S.MAHESH says:

    Sir,
    Myself joined in an mnc company during October’2008 and resigned on February’2010 and received bonus for 2009.

    Quarry is that as per Labour Laws from the day joining will be entitled for bonus and also for the days worked in the organisation.

    Need clarification and reply back.

    Regards

    GS Mahesh

  47. Rajesh P. Dagli says:

    Hi Megha
    The provision in the act says that an employer has to pay 8.33%of salary/wages earned OR RS.100/-.The amount of Rs.100/- is minimum per annum.

    Regards

    Rajesh P. Dagli

  48. MEGHA says:

    Sir according to the payment of minimum bonus, bonus is paid either 8.33% of salary or wage earned by the employ during the accounting year or Rs.100 which ever is higher.
    Please let me know that the amount of Rs.100 will be taken as per annum or per month.

  49. vijay says:

    What is the procedure of bonus please details send

    Thanks
    Vijay

  50. Rajesh verma says:

    Dear Sir,

    Pls let me know have come any ammendment in Bonus Act.

  51. Amit says:

    Reply to Basharat:
    No as per the sec 1 of Bonus Act, the basic condition is FACTORY and the 2nd condition is 10 or more person. hence Bonus act will not apply.

  52. Rusel.R says:

    If an employees basic pay is 2060, what is the amount of of bonus as per the statutory requirment

  53. Amit kumar agrawal says:

    R/Sir,
    I have joined in a Public limited company on 03/08/2009, But they gave me joining letter on 09/01/2010.Am i eligible to get bonus from the very starting i.e. 03/08/2009.

    Amit Kumar Agrawal
    Daga colony, barpali chowk,
    CHAMPA, Distt-janjgir-champa(cg)495671
    mob. 09039177708

  54. Basharat says:

    Dear Sir,

    Let me know if a pvt ltd company started his bussiness and earn profit his first eastablisment year but company registerd in shop & commercial Act and his employe strenth less than (10 parson) on year ending 31.03.2010 what the process company are laible for bonus or not.plz sugguest me

  55. Gaurav says:

    @ Rakesh:

    It is sure that company have to deposite unpaid bonus to the Labour Welfare Fund of the Govt.

    But how to pay and where the offices that I also dont know.

    I am looking for the same.

    Regards,
    Gaurav

  56. rakesh Verma says:

    Hi
    Pl. let me know what to do with Dear Sir,
    pls tell us what is the treatment of unpaid bonus amount, as there is no mention about the unpaid bonus in the Act.
    With regards
    Rakesh Verma

  57. Sharad Mittal says:

    What are the consequences, if the payment of Bonus for F.Y. 2008-09 is made in December,09 after ending of 8 months from closing of Accounting Year 2008-09.

  58. jaya panth says:

    sir is 8.33% a minimum to be released irrespective of company’s performance? and is it be calculated on one month’s salary ?

  59. Anil kumar says:

    whether Contract employee elgible or not for bonus

  60. Dhakshinamurthy.R says:

    Hi
    Pl. let me know what to do with the unpaid bonus amount as there is no mention about the unpaid bonus in the Act.
    With regards
    Dhakshinamurthy.R

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