__srini.kaduru__Started The Discussion:

I need a clarification on the below clause of Payment of Bonus Act,1965(amendment)

ii) Amendment to section 12 of the Payment of Bonus Act, 1965 to raise the ceiling for calculation purpose from the salary or wage of Rs. 2500/- per month to Rs. 3500/- per month;

Does the word "ceiling for calculation purpose " replicate the meaning that if the Basic+DA of an employee exceed Rs 3500/- for calculation purpose we need to take 3500/-for each month and sum the same for 12 months and apply the %.

Or any other method for calculating the Bonus.

Please help me out at the earliest.

Thanx and Regards,

Srinivas

09848615410

Member Opinions In This Discussion

+4 Others

An employee who is drawing a monthly salary of not more than Rs 10000 will be eligible for bonus. But those whose salary exceeds Rs 3500 will be paid bonus as if his salary is Rs 3500. That means one who gets salary of Rs 7500 or Rs 9000 will be paid bonus calculated on the basis of a salary of Rs 3500 per month only.

The rate of bonus is declared by the employer as per available profit with a minimum of 8.33% and a maximum of 20%.

Regards,

Madhu.T.K

Thank you very much. I still have a doubt about the calculation.

Say an employee Basic is Rs 9000/- who joined 27.02.2006. For calculation of bonus for 2006-07 (ie from April-06 to March 07) i have taken Rs 3500*12*8.33%=Rs3499/-

Is that the method correct?

or Rs 9000*12*8.33%=Rs8997/- which exceeds Rs3500/- .so Rs 3500 should be taken as suggested by one of my collugue.

Which one is correct?

In my view the limit Rs 3500/- is not for reached after calculation, but for the calculation purpose , in no case the amount of basic should not cross Rs 3500/- for each month.

Please suggest me the correct method.

Thanking you in advance...

Regards,

Srinivas

9848615410

Mr Madhu has clearly and correctly answered to your qestion. The point that Mr Madhu has tried to clear is that if any person is having salary not more than 10,000 then he will get bonus and to calculate bonus we will take Rs. 3,500 only as basic + DA no matter his salary is 6000 or 10000.

Rs. 3500/- is for calculation of bonus and its not a limit for bonus value after calculation. I hope I have put the same thing into more simpler manner :)

Also minimum and maximum %age for bonus calculation i.e. 8.33% and 20% respectively leads to range of bonus from Rs. 3499/- to Rs. 8400/-

Also if person is getting basic + DA less than 3500/- (which is quite unlikely) then bonus will be calculated on that lesser amount only.

--

Always Wishing Good for You...

Silky Bhardwaj

with regards

Rafiq

Ceiling of monthly salary for calculation of Bonus payment is Rs. 3500. i.e Rs. 3500 is for one month. If he has not full attendace in a month, pro-rata basis calculation is to be applied. Accordigly for 25 days in March will be equal to 3500x25/31 = 2822.58

Also if the salary for one year is 3500x12 = Rs. 42000, the minimum bonus will be Rs. 3500. (not 3,499). Because 8.33% is the percentage form of 1/12. Accordigly 20% bonus will be 2.4 times of average of one month admissible salary.

Abbas.P.S

Found This Useful? +Vote Up This Via Google.

Why Vote? User validation is extremely important for good content to prosper.

Why Vote? User validation is extremely important for good content to prosper.

Disclaimer: This network and the advice provided in good faith by our members only facilitates as a direction towards the actions necessary.

__The advice should be validated by proper consultation with a certified professional.__The network or the members providing advice cannot be held liable for any consequences, under any circumstances.