Understanding the Bonus Act: How Are Bonuses Calculated for Salaries Over 10,000?

Query Regarding the Bonus Act

I have a query regarding the Bonus Act. I want to know up to what limit the basic salary is eligible for bonus benefits. For basic salaries above 10,000, how is the bonus calculated? Additionally, what is the maximum limit of the bonus?

Thank you.

Employees whose basic salary is Rs. 10,000 and below are eligible for a statutory bonus. For the calculation of the bonus, Rs. 3,500 will be considered as the basic salary. Employees earning above Rs. 10,000 are not eligible for a statutory bonus. However, if the management is interested, they can pay it as ex gratia. According to the statute, the maximum bonus limit is 20%.

Regards,
Kamesh

Thank you, Mr. Kamlesh. Also, I wanted to know if the company hasn't completed 5 years, is the Bonus Act applicable? And how is the allocable surplus calculated?

Regarding your query on the bonus, the allocable surplus is calculated based on the gross profit determined after the completion of the financial year, which ends on March 31st each year. This is declared by the company after the completion of the books of accounts, including the P&L statement and balance sheet. According to Schedule 1 and 4 of the act, 67% of the gross profit is calculated for non-banking companies after subtracting depreciation, direct taxes, and development rebate from the gross profit. The surplus remaining after these deductions is referred to as the allocable surplus.

Regards,
V R RAO PULIPAKA

The bonus formula is Monthly Basic + DA * the percentage offered by the company (it ranges from a minimum of 8.33% to a maximum of 20%; if the company wants to give beyond 20%, they can) * 12.

For example, if Basic + DA is $5000 and the company wants to give a minimum of 8.33%:
$5000 * 8.33% * 12 = $4998.

The company should pay the bonus to their employees within 8 months of the closing of the previous fiscal year.

Thanks,
Venkat.