Understanding the Bonus Act: Can Someone Explain Eligibility and Calculations?

Clarification on Bonus Act Amendment of 2007

As per the Bonus Act amendment of 2007, which is the latest guideline for the payment of bonuses, I require some clarification:

- Are all employees whose salary is less than or equal to Rs 10,000/- per month eligible for a bonus?

- However, the maximum bonus payable is calculated at Rs 3,500/- per month.

- If the basic + DA is Rs 4,000/-, what will be applicable?

- If our company has decided to pay a 10% bonus this year, could someone demonstrate an example?

I am not clear on what Rs 10,000/- and Rs 3,500/- exactly mean in the act. Please see the attached Official Gazette on this.

Requesting seniors' help in clarifying the Bonus Act concept.

Regards,
Vicky 

Before 2007, the salary limit for eligibility for bonus payment was ₹3,500, but after the amendment, this limit was raised to ₹10,000.

Before the amendment, for calculation purposes, ₹2,500 was considered as the basis, but after the amendment, this limit was raised to ₹3,500.

I hope you got your answer.

Regards,
Yogesh Kumar Gupta

a) Yes, all employees whose salary is equal to or below Rs. 10,000 per month will be eligible for a bonus, subject to a minimum attendance of 30 days in the corresponding accounting year.

b) The maximum salary for bonus calculation will be Rs. 3,500. Accordingly, the maximum bonus will be 3,500 x 12 x 20% = Rs. 8,400.

c) Even if the basic + DA is Rs. 4,000, only Rs. 3,500 will be taken into account for bonus calculation.

d) If the bonus is 10% and the salary to calculate the bonus is Rs. 3,500, then the calculation will be as follows: 3,500 x 12 x 10% = Rs. 4,200. This amount, Rs. 4,200, is for full-year attendance. If the attendance is 8 months out of 12 months, then the bonus entitled will be 4,200 x 8/12 = Rs. 2,800.

Regards,
Abbas.P.S