What Are the Latest Changes to the Bonus Act 1965 and How Do They Affect Your Salary?

Kindly let us know the latest amendments to the Payment of Bonus Act 1965 and the maximum limit of bonus and salary.

The limit for the calculation of the bonus is Rs. 15,000/-; previously, it was Rs. 10,000/-.

Regards,
Siva Kumar Tata

If it is so, please provide us with the amendment notification.

Regards,
R N KHOLA

Sorry, Mr. Shivakumar1611, I do not agree with you. In my experience, as per the Bonus Act of 1965 and Bonus Rules of 1975, the bonus calculation is as follows:

Bonus Calculation Formula

BASIC + DA * Service * Percentage. For example, our company only offers 8.33%, so my bonus last year was 4000 * 8.33% * 12 = 3498.

Bonus Rules

1. One must work at least 30 days in the last financial year.
2. The bonus limit is 3500/- ceiling only.
3. The salary limit is 10000/- only (salaries above 10,000/- are not eligible for a bonus).
4. The limit ranges from a minimum of 8.33% to a maximum of 20% only.

To the best of my knowledge, there have been no recent amendments. If you have a copy of any amendments or other proof, please send it to me.

Regards,
Guru.

Dear friends, Our respected friend Mr. Khola has raised a vital point. If there is an amendment in the Bonus Act (which there is not yet, as I believe, and many others, including Mr. Khola), the person circulating such information must support it with a document. Otherwise, it will create confusion and bring down the credibility of CITE HR. People take the contents posted on this site very seriously. We all must keep this in mind before posting any information. No intention to hurt anyone.

Regards, Anil Kaushik

The statement of Mr. Guru is correct. The salary limit as of the date is Rs. 10,000/- only. There is a proposal to enhance it to Rs. 15,000/-. However, the amendment has not taken place yet.

Regards,
D. Phani Kumar
DGM-HR
VASAVADATTA CEMENT

Mr. D. Phani Kumar is correct. There was a proposal to enhance the salary limit up to Rs. 15,000 for eligibility for a bonus, but this has not taken place yet.

Inquiry About Bonus Act Amendment

If anybody can please help to know about the new amendment levied to the Bonus Act for the minimum bonus limit to be increased to 11% from the earlier 8.33%? Is this the new amendment, or is it just a proposed bill as yet? Kindly update.

Regards,
Neelam

Please let me know, as per the Bonus Act, if employees drawing more than ₹10,000/- basic salary in a month (Senior Management level) are eligible to receive a bonus or not. If not, how should we address this query if it arises?

Please assist me with this matter.

Thanks,
Chitrappa
Executive - HR

Latest Amendment to the Payment of Bonus Act

I am enclosing the latest amendment Bill passed on the Payment of Bonus Act in 2010 for your reference and records.

Regards

Whether this bill is passed or not, please explain with the gazetted notification. The document attached by our senior, Mr. S. Bhaskar, is the draft pending with both houses of Parliament. Please clarify at the earliest so that the confusion is resolved.

Regards,
Vishal Setia

As per your statement, the matter is still at the proposal stage, and we can anticipate its implementation soon.

With warm regards,

S. Bhaskar

The document attached by Mr. Bhasker is only a notification/bill and it has not been passed so far. I would like to refer to the Press Note dated 29th Oct. 2007, issued by the Honorable President regarding the enhancement of the eligibility limit for the payment of bonus from the salary or wage of Rs. 3500/- per month to Rs. 10,000/- per month. This Press Note is available in some other threads of Cite HR.

In my opinion, when the bill is passed, a similar type of Press Note may also be released.

In what context do you want the maximum limit of the bonus? If it is for calculation purposes, then it is Rs. 3500 per month. The minimum percentage is 8.33%, and the maximum is 20% as per the Bonus Act. Regarding the payout to the employee, the maximum limit of the salary is Rs. 10,000.

I hope this solves your query.

Regards, Vishal Setia

Welcome to CiteHR. Please find attached the supporting document as required by you.

Regards

Please let me know which basic salary, i.e., Rs. 10,000/- or Rs. 3,500/-, is taken for the calculation of the bonus. If the wage limit is Rs. 3,500/-, then the Rs. 10,000/- wage limit is considered for eligibility for the bonus.

For the Rs. 10,000/- wage limit, suppose the basic salary is Rs. 8,000.
- Bonus 8.33% = 8,000 * 8.33% = 666
- Ex Gratia on Rs. 8,000/- = 8,000 * 20% - 8,000 * 8.33%
= 1,600 - 666
= Rs. 934/-

Regards,
Parag

Wage Ceiling for Bonus Calculation

The wage ceiling for bonus calculation is still $3,500. If the basic salary is more than $3,500, the bonus should be calculated as mentioned below:

$3,500 x (number of months the employee has worked in that particular financial year) x 8.33% or above up to 20% = Actual bonus.

Regards,
Kamal

Thank you for your help. Suppose the basic salary is $5400. The maximum percentage is 20%.

Bonus Calculation

Bonus = $3500 * 12 * 8.33% = $3499

Can we also calculate the bonus at the maximum rate of 20%? Bonus at 20% = $3500 * 12 * 20% = $8400

Ex-Gratia Calculation

Ex-gratia = ($5400 - $3500) = $1900 * 12 * 20% = $4560

Please confirm if the above calculations are correct. Also, kindly advise where I should file bonus returns (Form D) in Mumbai and what Form C entails.

Regards,
Parag Chawan

Yes, I also agree with Mr. Guru and Mr. Phani. If it exceeds Rs 10,000/-, that can be accounted/paid as ex-gratia based on the company policy.

Regards, Anu

I do agree with Mr. Guru. He is absolutely right. However, there are other rules as well that make the company/employer liable for paying bonuses. First of all, the company should be in profit, and there are many other factors under which the employer can exclude themselves from paying bonuses. For more details, please refer to the BONUS ACT.

Regards,
Ms. Bhagat
Mgr - HR

Yes, Mr. Phani, the bill for the amendment was raised in 2010, and still, it has not been passed. The salary limit is Rs. 10,000 only as of the current date.

Regards,
Sant Tomar
HR-IR
Lafarge India P Ltd.

ESI is now 15k, but the proposal is for 25,000k. Guru is right, bonus is minimum 8.33% and maximum 20%, but it has not taken place yet.

Thank you!

Still yet to get any amendment regarding the ceiling limit, they are likely to be revised to either 15,000/- or 19,000/-. The government is planning to raise the bonus amount to whichever is higher.

DVRAO
Group Senior Manager - HR & Admin

Amendments to the Payment of Bonus Act 1965

In September 2015, Shri Bandaru Dattatreya, the Minister of State for Labour and Employment, took note of the 12 demands presented by various trade unions and assured that the Central Government is actively working towards addressing at least 9 of these demands. Amongst other requests, the trade unions emphasized the need to revise the wage eligibility limit and calculation ceiling for bonus payments to align with current economic trends. They proposed increasing the wage eligibility limit from INR 10,000 to INR 21,000 and raising the calculation ceiling from INR 3,500 to INR 7,000 or the minimum wage set by the appropriate Government for that category of employment, whichever is higher.

Per the provisions of the Principal Act, any employee earning a salary of INR 10,000 or less per month and having worked for a minimum of 30 days in an accounting year is entitled to a bonus (calculated as per the methodology outlined in the Principal Act) with a minimum of 8.33% of their salary and a maximum bonus limit of 20% of their salary.

Previously, if an employee's salary exceeded INR 3,500 per month, the bonus calculation assumed their salary to be INR 3,500. The Amendment Act has now raised the wage ceiling for calculation to INR 7,000 and considered scenarios where the minimum wage for such employees may surpass INR 7,000, providing them with the opportunity to receive a higher bonus amount.

I trust this information clarifies any uncertainties.

Regards, Malay