Diwali Bonus Confusion: Does Your Company Decide the Amount?

Can someone tell me if there is any ruling on the amount of Diwali/festival bonus? Does it differ from organization to organization?

Hi,

If you can go through the bonus act, it will give you a clearer idea.

Regards,
Hrushikesh

Please go through the Payment of Bonus Act for details. There is no difference in bonus for organizations regardless of their size. However, they are free to determine the ex-gratia as they wish.

Thanks, guys! We were always given 1 1/2 months' salary as a bonus, which is also part of our CTC. On Diwali, we were informed that the bonus will not be that much but a meager amount.

In my view, the act does not mention Diwali or festival bonuses. It only states that if some festival bonus is paid, then that amount is allowed to be adjusted against the bonus payable as per the Payment of Bonus Act. Bonus is only payable if the salary is less than Rs 2500 per month. Perhaps this amount was recently increased to Rs 3500 per month—I am not entirely sure.

In other words, organizations do not have a legal obligation to pay bonuses to highly-paid employees. If they do pay, it is considered an ex gratia payment and not a bonus under the Payment of Bonus Act.

An employee is entitled to a bonus if his basic is <=10000/-. The bonus will be calculated based on Rs. 3500/- (Minimum 8.33% to 20% - depending on company profit - Allowable surplus). If the company is in a loss, it may be exempted for the first 5 years. After that, it is compulsory to pay.

Thanks & Regards,
Ranjeet

It differs from company to company, but the minimum percentage you must achieve is if the company is not in a loss.

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No rule on payment of BONUS on the "DIWALI" occasion. Payment of Bonus should be on the following two conditions:

1) Employee salary/wages should not be greater than Rs. 10,000/-
2) The minimum bonus of 8.33% of wages should be paid within 8 months from the closing of the accounting year.

Yes, if you have already paid customary bonuses to your employees, you can deduct that amount of customary bonus from your annual bonus and make the range of the bonus between 8.33% - 20% of annual earnings, not on wages.

Hi,

Bonuses are paid annually within 8 months from the close of the accounting year of the company. A minimum of 8.33% and a maximum of 20% of the basic salary can be given to employees if they have worked for at least 30 days. It is calculated based on the number of working days each month. The ceiling for the bonus is Rs. 3,500.

Regards,
Aditi

Bonus calculation depends on different organization policies. The formula typically used is:

[ text{Bonus} = text{basic salary} times 8.33% times text{number of months} ]

Please ensure to follow your organization's specific policy for bonus calculations.

There is no criteria for a Diwali Bonus. Bonuses can be given for any occasion, but typically only once a year, varying from organization to organization. As mentioned, bonuses can range between 8.33% to 20%.

Sarfaraz

Make bonus calculations in basic from 3500/- to 10000/-. Bonus will be calculated; a sample file is attached herewith (Min. 8.33% to 20% - depends on company profit - Allowable surplus).

Highly paid bonus to employees is an ex-gratia and not a bonus under the Payment of Bonus Act.

Gopalakrishnan