Is the Bonus Act Relevant for a New Company Expecting Profits Next Year?

Hello,

A newly set up company is projected to make a profit in the next year. Will the Bonus Act be applicable to that company or not?

With Regards, SANTOSH KUMAR GUPTA

Hi Buddy,

A newly set-up establishment is exempt from paying bonuses for the initial five years provided no profit is made during this period.

With Regards,

Mr. Thumbs Up

Hello,

In the first five accounting years following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment, a bonus shall be payable only in respect of the accounting year in which the employer derives a profit from such establishment. This bonus shall be calculated in accordance with the provisions of this act in relation to that year, but the concept of set-off and set on will not apply.