Understanding Bonus Deductions: Are ESI and PF Applied to Your Bonus?

Dear Sir,

Is ESI and PF deducted on bonus amount, and is there any exemption for a new company for payment of bonus or when the employee gets a bonus for the first time in a new company?

Hemant

ESI and EPF should not be deducted from the bonus amount paid to employees. According to the Payment of Bonus Act, 1965, a new company needs to pay bonus only in the year in which the company makes profits. However, this provision is applicable only for five years from the date of first production.

Regards,
Madhu.T.K

Dear Hemant,

With reference to the payment of bonus for newly set up establishments, you may go through section 16 of the Payment of Bonus Act, 1965.

Regards,
R.N. Khola