Understanding Section 15 of the Payment of Bonus Act 1965: Can Anyone Explain Set-On and Set-Off?

Hi All,

Would anyone please enlighten me about "section 15" (set-on and set-off of allocable surplus) under The Payment of Bonus Act, 1965.

Thanks & Regards,
Pooja

Hello Pooja,

"Set-on" means the Allocable surplus is higher than the payment of Bonus, while Allocable surplus is lower than the actual Bonus, it is Set-Off.

Regds,
Nehal

Understanding the Bonus Act and Section 15

There is a bonus act that mandates paying a bonus to employees on a yearly basis. Our accounting year runs from April to March, and the balance has also been made.

In the Bonus Act, there are Bonus Forms A, B, C, and D. Forget Form C—it's for employee signatures only. Forms A, B, and D are for set-on and set-off.

The actual bonus paid to the employee is Rs. 2,00,000. Your balance sheet's total profit/loss is Rs. 40,00,000. Take 60% of that amount, which is Rs. 2,40,000. Actually, your profit is Rs. 2,40,000. You are to pay the bonus from Rs. 2,40,000. However, you have paid Rs. 2,00,000, and your Rs. 40,000 is set on, which will be entitled in the next year.

Regards,
Bhavesh Surani