Diwali Bonus Dilemma: Are Bonuses Over 3500 INR Legal Under the Bonus Act?

Dear Seniors, Happy Diwali to all in advance.

Bonus Act Compliance Inquiry

As per our Internal Auditor's report, bonuses would not be payable to any employee exceeding 3500 INR as per the Bonus Act. Please reply to me in accordance with the law.

Regards, Ranchhod Dangar

As per the Bonus Act of 1965:

Applicability of Bonus

The ceiling for drawing a Bonus is Rs. 10,000 (Basic + DA). This means that employees who draw Rs. 10,000 or less (Basic + DA) are eligible to receive a Bonus.

Calculation

The maximum limit for calculation purposes is Rs. 3500.

For example:
- Salary of Employee A: 9500
Calculation purpose: 3500
- Salary of Employee B: 2800
Calculation Purpose: 2800

Thank you