Dear Members,

Section 2(21) says definition of "salary or wages" means all the remuneration (other than remuneration in respect of overtime work) be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payment, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include-

i) any other allowance which the employee is for the time being entitled to

ii) value of house accommodation or of supply of light, water, medical attendance or other amenity

iii) any travelling allowance

iv) any bonus (including incentive, production and attendance bonus)

v) any contribution paid of payable by the employer to any pension or provident fund

vi) any retrenchment compensation or any gratuity or retirement benefit payable to employee

vii) any commission payable to employee

Our company give below allowances:

Basic+HRA+Special Allowance+LTA=Gross.

So if we find eligibility of bonus for our employees what we take Basic or Total Gross. Kindly suggest.

From India, Delhi

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For the purpose of calculation of Bonus, salary or wages includes -Basic Salary + Dearness Allowance/Special Allowance only.

Special Allowance

Special allowance differs from company to company. In some companies, it constitutes any allowance or benefit granted to employees to meet specific expenses towards efficient performance of duties in an office or employment of profit (as laid down in the IT Rules, 1962).

If it is specifically granted to employees, it is exempt to the extent of actual expenditure incurred.

However, in pay slips given to employees by some companies, any number by the name of 'special allowance' is usually the leftover component of the salary, after allocations are divided into basic, LTA, transport allowance, HRA and so forth. Special allowance is, therefore, money which does not fit into any other head in a salary slip or the residual factor. After all the different components of a salary slip including benefits are allocated, the remaining sum of money which makes up the annual CTC, forms part of special allowance.

From India, Delhi
In your case eligibility of bonus for your employees will be Basic + Special Allowance (as Dearness allowances is not in salary slip)
From India, Delhi

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