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Dear Sir/ Madam,
As we all know the minimum rate of Bonus is 8.33% & maximum rate is 20% under Payment of Bonus Act. I would like to ask a question- Can a company pay any percentage of bonus (say 12% or 15% or 17%) between Minimum rate & Maximum Rate under Payment of Bonus Act or company only eligible to pay 8.33% or 20% bonus under Payment of Bonus Act ???

Dear Abhishek673,
Please view below given link to get answer to your query.
https://www.citehr.com/500683-maximu...on-making.html

Yes. company can fix a per centage over and above the statutory per centage. Now this statutory per centage is going to be revised and GO in this respect is awaited. Thanks R K Nair
Thank you Keshav Sir and Radhakrishnan Sir for your valuable suggestion. So can I call 8.33% is non profit sharing Bonus & any percentage above 8.33% is profit sharing bonus while filling up the Annual Return Form D under Payment of Wages Act, 1936... Please enlighten me.
sorry. It will be Annual Return Form -IV under Payment of Wages Act, 1936 instead of Form D..
Amount of bonus you pay (8.33% to 20%) depends on the working of the Allocable Surplus Register.
The computation of the same is already given in the bonus act.
Once the computation is properly done (and recorded in Allocable Surplus Register, you will know what % of bonus you have to pay.
Paying 15% when the act requires you to pay 20% is an offence. Please do not be under the impression that 8.33% if the statutory requirement

Dear Abhishek,

The gist of your question is, had I understood correctly, whether it is mandatory to pay the minimum bonus only @ 8.33% and the maximum bonus only @ 20%.

Basically, the computation of bonus under the Payment of Bonus Act,1965 is related to the allocable surplus culled out from the available surplus calculated as per Sec.5 of the Act. In so far as the minimum bonus is concerned the quantum is absolute even in the absence of any allocable surplus. In other words, even when there is no profit, the employer has to pay the minimum bonus @ 8.33%.

When the allocable surplus exceeds the amount of minimum bonus, maximum bonus should be paid not exceeding 20%. It implies that the maximum bonus shall be in a range between just above the minimum bonus i.e., 8.33% and the maximum limit of 20% AND NOT EXACTLY AND INVARIABLY @ 20% as you have said. To catch this point, you should have a thorough and clear understanding of the principle of "Set-on and Set-off "and provision should have been made strictly as per Sections 15 and 16 read with Schedule IV of the Act and Form B maintained up to date.

Thank you Umkanthan Sir for your valuable suggestion. Sir, can I call 8.33% is non profit sharing Bonus & any percentage above 8.33% is profit sharing bonus while filling up the Annual Return Form IV under Payment of Wages Act, 1936.?? Sir Please enlighten me, if possible.
I think that you need a deeper contemplation into the concept of bonus contemplated under the Payment of Bonus Act,1972. The "bonus" under the Act is certainly a share in the profits of the establishment. The minimum bonus payable even in the absence of profits has to be set off from the surplus amount set on after paying the maximum bonus.
Dear Abhishek,

Our learned member Sh umakanthan has very nicely explained the provisions of the Payment of Bonus Act,1965 for calculating the process of bonus.The computation of gross profit has to calculated as given in First or Second Schedule, as the case may be. As regards your query as to whether 8.33% can be called as non profit sharing Bonus & any percentage above 8.33% is profit sharing bonus while filling up the Annual Return in Form IV under Payment of Wages Act, 1936 is concerned, my views are that any AMOUNT or PERCENTAGE of bonus calculated under the Payment of Bonus Act,1965 is nothing but profit sharing bonus and you can't assign your own name to such bonus. You will observe that while making calculations under First or Second Schedule, we finally derive Gross Profit, which forms the very basis of calculation of the percentage of bonus. Any amount of bonus which forms the part of remuneration under the terms or condition of the service or is payable under any award or settlement or in compliance of an order of the court may only be shown while filling up the Annual Return in Form IV under Payment of Wages Act, 1936.

BS Kalsi

Member since Aug 2011


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