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Thread Started by #manu taneja

if basic + DA is less than 7000/- then on what we calculate bonus??
15th October 2016 From India, Rewari
if the bonus is less than the 7000 take the basic what ever the basic is ie ex. 6500 take it as the basic + DA .
15th October 2016 From India, Hyderabad
But bonus amendment said whichever is higher either minimum wage or 7000/- My understanding is 7000/- Hemraj Yadav
15th October 2016
Dear Manu Taneja, In your case, since basic+DA is less than 7000, as per statutory obligation, you have to make min.rs.7000/- as bonus.
15th October 2016 From India, Thane
Hemraj,
Bonus is to be paid on the actual wages for the year (basic + DA paid each month for the entire financial year)
The act provides a ceiling. The ceiling is that if the wages is higher than ₹7000 per month, or higher than minimum wages where minimum wages is more than ₹7000 per month, the bonus will be paid as if the employee had wages of ₹ 7000 (or minimum wage rate, whichever higher).
I hope you are now clear about the distinction between the two of them
16th October 2016 From India, Mumbai
Dear Saswata ji,
Ceiling and actual wage words is not mentioned nor used in bonus act anywhere. And where written in act to calculate bonus on actual who is getting less than 7000/-. This is individual understanding and clearly written in amendment 7000/- or Minimum wage which ever is higher .
Pl check
Regards !!
Hemraj
16th October 2016
Dear D.srihari, Kindly go through the amendment once again and then comment on the issue please. Your interpretation is contrary to the amendment. P K Sharma
16th October 2016 From India, Delhi
Dear Manu Taneja.
Objective of ceiling limit 7000 is
To reduce the burden of employer as well as to provide the reasonable amount as bonus to all eligible employees/workers therefore irrespective of actual Basic plus DA calculate annually bonus either on 7000
or on your state minimum wages for scheduled employed whichever is higher as per sec 12,
Calculating the bonus on actual basic plus DA in case of less then 7000 is just
To avoid the statutory dues & which is subjected to punishment & penalties as
Defined in sec 28 of bonus act. Hence even if basic plus DA is less then ceiling limit always
Calculate bonus either on ceiling limit or on state minimum wages for scheduled employed whichever is higher,
Thanks & Regards
Devesh Chauhan
Practicing In Accounts, Finance, Taxation & Labour Laws
16th October 2016 From India, Basti
Dear Manu Bhai,
I don't know as to why there is doubt or confusion. The persons getting higher than Rs.7000/- and up to Rs. 21000/-, their bonus shall be calculated as if their salary or wages is Rs. 7000/- or minimum wages, whichever is higher. The persons getting less than Rs.7000/-, their bonus shall be calculated on the actual pay ( basic plus DA) drawn by them.
BS Kalsi
Member since August, 2011
16th October 2016 From India, Mumbai
Daer all, My Question is: If a Workmen worked for 20 days in a month and Get a Basic Salary of 6000/ , then what amount to be considered for calculation in bonus?? 6000 or 7000???
17th October 2016 From India, Kolkata
Dear Srihari,
Dear Srihari,
In continuation to the discussions, I would like to once again bring to your notice the Calculation of bonus in the light of amendment:
The Act provides that the bonus payable to an employee will be in proportion to his or her salary or wage. However, earlier if an employee’s salary is more than Rs 3,500 per month, for the purposes of calculation of bonus, it was assumed to be Rs 3,500 per month. The amendment raised this calculation ceiling to Rs 7,000 per month or the minimum wage notified for the employment under the Minimum Wages Act, 1948 whichever is higher.
I could not understand how you interpreted " if the bonus is less than the 7000 take the basic what ever the basic is ie ex. 6500 take it as the basic + DA . 15th October 2016 From India, Hyderabad D.srihari Manager-HR- cell-08686193637 Bulk Drug APIs.Hyderabad"
I may be corrected if my submissions are wrong.
P K Sharma
17th October 2016 From India, Delhi
Dear all,
Rs. 7000/- is not a maximum ceiling limit but it is the minimum limit. So If an employee is drawing salary less than Rs. 7000/- then he should be paid min Rs. 7000/- if his salary is more than Rs. 7000/- then he should be paid at the rate of min wages fixed for that category in the state. Hope it is now clear to all.
17th October 2016 From India, Mumbai
Mr AL Gupta had very rightly interepreted the new bonus act It is very clear and how many colleagues get confused
1 If min wages is less than 7000, then for bonus calculation it should be considered as 7000/-
2 If min wages is more than 7000 & below 21000, then whatever the min wages earned on that 8.33% is bonus
3 Max. ceiling of bonus is @ 20% of min.wages earned i.e. workers cannot demand more than 20% as bonus.
Hope it is very clear & understandable.
P L Kanthan
17th October 2016 From India, Thane
When (basic+da)>7000 then it 7000 when(basic+da)<7000 then it actual earning And the % may be 8.33 to 20 % of (basic+da) Max up to 20% with union agreement for workers
17th October 2016 From India , Gurgaon
I think it is important for members to read the bonus act and understand it properly, so as not to pass wrong information the the readers on this forum.

Sec 10 defines minimum bonus :

Payment of minimum bonus.- Subject to the other provisions of this Act, every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 and in respect of every subsequent accounting year, a minimum bonus which shall be 8.33 per cent. of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year.

so, its 8.33% of salary or wages.

Sec 12 talks of bonus for certain employees :

Calculation of bonus with respect to certain employees.- Where the salary or wage of an employee exceeds 3*[two thousand and five hundred rupees] per mensem, the bonus payable to such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were 3*[two thousand and five hundred rupees] per mensem.]

This limit of Rs. 2,500 was increased to Rs. 2,500 and now increased to "Rs. 7,000 or minimum wages, whichever higher"

so, an employee gets bonus (min bonus) at 8.33% of his actual wages (which is defined as basic + DA) and if his salary or wages is more than Rs. 7,000 then the bonus will be computed as if his salary is Rs. 7,500.

If the company has made more profit and money is available in allocable surplus account (working provided in Sec 5), then the bonus will be higher, subject to a maximum of 20% of salary or wages. And again, if someone's salary or wages is more then Rs. 7,000 then he gets 20% of the ceiling (20% of Rs. 7,000 X 12 months)

Rs. 7,000 is not the minimum bonus, it is not necessary for the company to pay Rs. 7,000 as bonus to someone whose basic and da is less than Rs. 7,000 per month.
18th October 2016 From India, Mumbai
Hi Members, There has been frequent quries/doubts/misinterpretations about the latest Amendment in Bonus Act. The amendment is : - " Where the salary/wage of the employee
18th October 2016 From India, Thane
Sorry friends, my PC misbehaved.
Pls find attached scanned copy of Bonus Act Amendment 2016.
Kindly read the sentence 3.(i) " three thousand and five hundred rupees" at both places where they occur, the words "seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government," "whichever is higher " shall respectively be substituted;
This clearly says that even if the min wage is < 7000, min 7000 to be paid as bonus. i.e. every one is assured of min 7000 as Bonus; not that if anybody's wage is <7000, calculation shall be on that low wage.
18th October 2016 From India, Thane

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Dear Priyabrat
In reference to your query, you are advised to refer to Section-13 of the Payment of Bonus Act, 1965, which says that if an employee has not worked for all the working days in an accounting year, his bonus amount will be proportionally reduced.
BS Kalsi,
Member since August, 2011
18th October 2016 From India, Mumbai
I agree with the contention of Sh Saswata Banerjee that the limit of Rs 7000/- has been fixed for the employees, who are drawing salary more than Rs 7000/- and up to Rs.21000/-per month. The employees who are getting less than Rs 7000/- shall be eligible to get the bonus calculated based on their basic plus DA drawn by them in that accounting year. Section 11 clearly provides that employee shall be eligible to get an amount in proportion to the SALARY OR WAGE EARNED BY HIM DURING THE ACCOUNTING YEAR where allocable surplus exceeds the amount of minimum bonus.
BS Kalsi,
Member since August, 2011
18th October 2016 From India, Mumbai
Dear All Members,

I would like to know in which sec of

Bonus act. It is written that if basic plus

DA is less then 7000 then bonus would be

calculate on actual basic drawn by employee and if basic plus DA is exceed

7000 then bonus is to be calculate on 7000 or minimum state wages fixed by appropriate govt for scheduled employment.

Also i would like to ask the basic question to all members what was the object of govt for inserting this act. Weather to provide benefit to employee or anything else? Why the govt has extend the threshold limit from 10000 to 21000 weather to bring more employees within the purview of bonus act. Or anything else? What was object of govt to extend the ceiling limit from 3500 to 7000 weather to provide higher amount as bonus to employees or to provide the benefit to employer,

Now let me tell you all few month back

I met with my range labour commissioner the same question i had asked to him if basic plus DA is less then 7000 then on what amount bonus is to be calculated he said this act was inserted to provide benefit to employees & drafting salary structure is depends on companies policy an employer may devide the salary also into allowances just to avoid the bonus also therefore even if basic plus DA is less then 7000 even then bonus would be calculate on 7000 or if employees are falls under scheduled category and state minimum wages is higher then 7000 then state minimum wages will be taken.

Thanks,
19th October 2016 From India, Jaipur
Dear AMTGPT
I am fully agreed to your submissions and have given this interpretation in these threads so many times but few contributors are narrating it in their own ways which is contrary to the meanings of amendment.
P K Sharma
19th October 2016 From India, Delhi
Employee who has worked for less than 30 days in FY is not entitled to receive bonus.
19th October 2016 From India, Mumbai
Employee who has worked for 30 or more days in FY is entitled to receive bonus.
19th October 2016 From India, Mumbai
I think this is my third post on same query and still my understanding is that if basic + da is less then 7000/- then bonus will calculate on 7000/-whichever is higher to calculate bonus .And pl understand the meaning of whichever is higher either 7000/- or state minimum wage .
Thanks to all
20th October 2016
If you deliberately chose to ignore what the act actually says, then no amount of posts on this thread will make any difference.
20th October 2016 From India, Mumbai
Then calculate that month bonus as here
{7000/month day x working day} x bonus %
for example if working day 20 and month is january and bonus % is 8.33
then
7000/31x20=4516 bonus calculation wage
and bonus is = 4516 x 8.33%=376/-
21st October 2016 From India, Roorkee
The calculations of bonus is made on earned wage which includes weekly offs and holidays as well. As such it is pay days not actual working days for making calculations. Actual working days are calculated for checking 30 days working qualification purpose.
P K Sharma
22nd October 2016 From India, Delhi
Actual Calculation Bonus 7000 or 8.33% and paid bonus working days (26) or Actual working (30) please give details
31st January 2018
THE PAYMENT OF BONUS ACT, 1965 - FAQ
Is an employee entitled to get bonus on the basis of his entire salary or wage?
If an employee is drawing a salary or wage not exceeding3500.00 per month, he is entitled to get bonus on his entire salary or wage.
If an employee is getting a salary or wage exceeding3500.00 per month, but not exceeding 10000.00 per month, the bonus payable to him is to be calculated as if his salary or wage were3500.00 per month. An employee getting a salary or wage exceeding10000.00 per month is not entitled to get bonus. {Section 12}
Regards
Narendra
18th June 2018 From India, Chennai
Dear Sir,
How can we calculate bonus working days from financial year 2018-19. Please give an example.
Amit Gaur
31st October 2018 From India, Jaipur
Dear All
++++++++++++++ Thanks for your inputs. Wish a happy and prosperous festival of lights, DIWALI +++++++++++++
5th November 2018 From India, New Delhi
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