Limitations Under the Payment of Bonus Act
For bonus payment, there are several limitations under the Payment of Bonus Act, namely:
- Salary limit, i.e., Rs. 10,000.
- Limit on salary for bonus calculation, i.e., Rs. 3,500.
- Limit on percentage, i.e., 20%, etc.
If the organization is able and ready to pay beyond these limits, it is called ex-gratia. Accordingly, there is no limit for ex-gratia, but it must comply with the affordability and discretion of management.
The maximum time limit for bonus payment is 8 months from the financial year. Normally, the payment may be connected with any festivals within the period, such as Deepavali, Ganesha Chathurthi, Onam, etc. Ex-gratia will also be disbursed during these times. Bonus/ex-gratia payments will attract income tax.
Regards,
Abbas. P.S