My company does not pay bonus to the employees whose salary is more that Rs. 10000.00 . They plea that these employees are not eligible for bonus as per bonus act (ceilig limit 10000.00) . Please guide me whether they can do this , if not , what should we do ?. So that we can get our right.
Parduman Kumar
13th October 2010 From India, Delhi

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Hi Parduman,
As per Bonus Act the ceiling limit amount 10,000 is on Basic only not on the gross, so whose basic is more than 10,000 for them it is not compulsary to pay bonus if comany wants to pay those empoyees also then it is Exgratia only not the basic.
T. Sivakumar
13th October 2010 From India, Hyderabad
Dear Siva Kumar, But if employee basic salary is less than, 10,000..then on what percentage bonus will be paid..is it 20% on basic pay. Pls confirm Regards Priyanka
13th October 2010 From India, Delhi
Dear Priyanka,
The ceiling salary for Bonus coverage is Rs. 10,000 and its general components are Basic+DA. But for Bonus payment, maximum salary is Rs. 3,500.
The allocable surplus will be distributed among the eligible employees. If it is 20% or above, the statutory bonus will be 20%. If it is 8.33% or below, the bonus should be 8.33%. If it is in between 8.33% and 20%, the actual percentage is to be paid.
13th October 2010 From India, Bangalore
Hi, Can u please give us one eg of the highlighted part calculation? that would be very kind of u? Looking forward to calculation
14th October 2010 From India, Chandigarh
Hi All.... But still it’s not clear... is it possible with an example... Regards, Shaad
14th October 2010 From India, Hyderabad
Hello Friends,
My company is deducting the bonus from my CTC which is 8.33% of my basic.
When i ask our HR for the same they told me that they will pay bonus on diwali. Firstly they are deducting bonus from my salary then on diwali they are paying the same to me.
What is bonus act???
14th October 2010 From India, Ahmadabad
Dear All,

Bonus will be caliculated based on earned Basic only.

Eligibility: who is drawing the basic salary less than 10,000/- then he is eligible for getting the Bonus.

Percentage of bonus: min8.33% and max20% (Employeer have rights to pay in between these min and max percentage)

Caliculation of Bonus:

Above criteria is eligible for Bonus if any body is eligible for bonus the caliculation is as follows

Let us assume Employer wants to pay 10%

Case 1: if employee basic salary is lessthan 3500/- then the bonus caliculation is 10% amount on cummulation of 12month earned basic.

for example basic salary is 2500 then (2500+2500+2215+2500+1820+.....+2500)*10%

case 2: If employee Basic salary is Graterthan 3500/- then bonus caliculation is

10% amount on 3500*12

for example basic salary is 4500 then (3500+3500+3500+....+3500)*10%

Note: if earned basic is graterthan 3500/- then consider basic salary is only 3500. If basic is lessthan 3500/- then consider actual basic as it is.

I hope you all understud with my examples other wise feel free to call.


Sriharsha Y
14th October 2010 From India, Visakhapatnam
Hi All,

I tried to read from different sources and this is what I understood as part of calculation

• If an employee earns more than Rs 10000/- pm as a part of wages or salary then he/she is not eligible for bonus.

• if pm wages are < 10000/- then the bonus calculation can be done as

 First criteria is that every such employee should at least get 8.33% of his salary (basic+da) earned around the yr

= (Basic pm + DA pm )*8.33%*No of months of service

** basic +da can be taken as max Rs 3500/-

 If employer wishes to give more than 8.33% of bonus then max percentage which can be used is 20%. In such cases the extra funds are allocated n if they fall anywhere b/w 8.33% or 20 % then that amount is paid. I f they are more than 20% then max limit is 20% only..

 In case employer has fewer funds then too 8.33% of bonus should be paid.

Refer to the link icai.org

Bare Act - The Payment of Bonus Act, 1965 <link updated to site home> ( Search On Cite | Search On Google )

First one has got various cases which make understanding clear...second one has got the nitty gritties of the act...

I hope I understood it right. Kindly correct me if anything has been stated wrong.


14th October 2010 From India, Chandigarh
It is OK for calculation purpose.
Most of the times, if any organisation declares Bonus % (depending upon the allocable surplus) usually 8.33 % which is the least limit takes for calculation.
In above case, management can also take the change as: If 10% is the declared bonus than 8.33 % amount will be considered as Bonus amount and remaining amount 1.67 % will be the ex-gratia amount. Afterall, there will not be less in amount in total, but for compliance purpose, this may be more suitable. because if 10% is purely declared as Bonus %, then it may become the least % of the organisation and for next year, the same 10% could be demanded or expected by employees.
Its just a opinion,
Your views please,
14th October 2010 From India, Sholapur

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