Understanding Bonus Limits: How Are They Calculated and What Are the Salary Bases?

Dear All,

What is the minimum and maximum limit of the bonus, and is the bonus calculated based on the gross or basic salary?

Regards,
Irfan

Dear Irfan,

If the basic salary plus dearness allowance (DA) of an individual is less than 10k per month, he is entitled to get a bonus as per the Bonus Act. Bonus calculation is done based on 3500, meaning we will presume that the individual is receiving 3500 per month. The minimum bonus is 8.33%, which amounts to 300, and the maximum bonus is 20%, which amounts to 8400. The bonus is calculated on basic salary plus DA.

Thank you,
J. S. Malik

Hi Irfan,

The minimum bonus limit is 8.33% (one month salary), and the maximum is 20% (two and a half months' salary) on the gross salary. This is for your information.