Understanding the Bonus Act: Is Your Bonus Calculated on Gross or Basic Salary?

Hi all,

Could anyone tell me if the bonus under the Bonus Act is calculated based on the Gross salary or Basic salary? I would really appreciate it if someone could help me with this.

Regards,
Himal

Hi Mr. Himalpandit,

As per the Bonus Act, the minimum bonus to be paid is 8.33% of BASIC + D.A. The minimum ceiling is Rs. 3500.00. An employee drawing more than Rs. 3500 as his basic and DA and other allowances has to be paid only Rs. 3500/- as the sealing rate and not more.

Bonus is a discretionary part of the organization's management. They can pay a full 1-month salary. Some organizations even pay 3 months' bonus. As per Income Tax rules, the bonus paid by a company allowed is up to 20% of BASIC + DA.

Mohan Rao Manager HR