Rkn61
Hr Manager
Bhartiya Akhil
Freelancer

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Hello, We are a 15 year old company. We have 1 factory running under this company for 15 years. Recently, we started production in a new factory which is independent of the old factory but is owned by same company. My question is if Bonus Act will be applicable on the new factory immediately or we will get grace period (as the factory is not making any profit currently) ? The company overall is making a profit but that particular factory is making huge losses. The GST, PF & ESI number of both the factories is different and the product range is also not related.
From India , Jaipur
For the first 5 years, organizations need not pay bonus if they have made losses. If they have made profits in any year in the first 5-year period, they will have to pay out bonus for that particular year.
After the completion of 5 years, organizations are required to pay bonus as per Sec 16-1b, irrespective of whether they are making a profit or loss. Refer to section 16-1b for detailed clarifications on the calculation of bonus .

From India, Aizawl
Dear Manish,

I would like to draw your attention to Section 3 of the POB Act which is given below verbatim.

3. Establishments to include departments, undertakings and branches

Where an establishment consists of different departments or undertakings or has branches, whether situated in the same place or in different places, all such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of computation of bonus under this Act:

PROVIDED that where for any accounting year a separate balance-sheet and profit and loss account are prepared and maintained in respect of any such department or undertaking or branch, then, such department or undertaking or branch shall be treated as a separate establishment for the purpose of computation of bonus, under this Act for that year, unless such department or undertaking or branch was, immediately before the commencement of that accounting year treated as part of the establishment for the purpose of computation of bonus.

You said that the GST, PF & ESI number of both the factories is different and the product range is also not related. However, you have not mentioned whether the name of both the factories is same or different.

If the name of both the factories is one then both the factories are one "part and parcel".

If your owner is clever then he might be preparing and maintaining separate balance-sheet and profit and loss account for both the units.

I have seen cases wherein separate balance-sheet and profit and loss account is prepared and maintained unit wise and the treatment of bonus is given separate.

From India, Mumbai
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