Recent Bonus Act Amendment: Do We Calculate Bonuses on the New Rs. 3500 Ceiling?

Dear All,

I need clarification regarding the recent amendment made in the Bonus Act. The ceiling has been increased from Rs. 2500 to Rs. 3500. Do we now need to calculate the bonus based on Rs. 3500?

This is urgent, so please clarify my doubts.

Regards,
Shilpi

Hi Shilpi,

The eligibility limit for the bonus has been raised from Rs 3500 to Rs 10,000, which means all those employees earning a basic of up to Rs 10,000 will now be eligible to get the bonus. The limit for the purpose of calculating the bonus has been revised from Rs 2500 to Rs 3500, meaning the bonus will now be calculated on Rs 3500.

Hope things are clear to you.

Amit Goyal

Hi Amit,

I need some clarification.

1. The limit of the bonus has been increased from Rs. 3500 to Rs. 10,000. Could you please confirm the effective date of this change?

2. The eligibility criteria are "Earn Basic" up to Rs. 10,000 or "Basic+DA" up to Rs. 10,000 as per the salary structure of the employees.

3. For those whose "Basic+DA" is more than Rs. 3500, how should we calculate their bonus? For instance, if the Basic+DA of an employee is Rs. 8000.

Thank you in advance.

Surya

Hi Amit,

Thanks for the amendments. I know, but I also came to know that their effective date is not yet announced, at least for Basic increasing to 10,000/-. Now, I want to clarify that for calculation purposes, should I take 3500 or 2500/- as we are giving a bonus in Diwali, so it's urgent.

Regards,
Shilpi

Hi Shilpi,

This amendment has been passed by the cabinet but has not yet become an Act, so as of now, please keep the wage ceiling at 3500/- for eligibility and 2500/- for the calculation.

Sorry for the wrong reply earlier.

Regards,
Amit Goyal

Hello, guys,

Please refer to the link. The amendment was signed yesterday by our honorable President. Therefore, it has come into effect since April 2006 and is applicable from the last financial year.

URL: [http://pib.nic.in/release/release.asp?relid=32264](http://pib.nic.in/release/release.asp?relid=32264)

Bharat.

Hi,

Here is the soft copy of the gazette on the latest amendment in the Payment of Bonus Act.

Thanks & Regards,
Kalyan R
Mobile: 9840942232

Yes, the amendment is applicable from April 2006. Again, 10000 means Basic+DA. So, if Basic+DA is more than 10000, you are not eligible for a bonus.

Now, the calculation:

If Basic+DA is more than 10000, not eligible :-(. Let's take a test case of 9000 (Basic+DA). The act states that the bonus will be calculated on 3500. Therefore, the calculation for declaring a 20% bonus will be as follows: (3500 * 20%) * 12 (Bonus is given for the year).

Take Care: The act specifies eligibility for bonus at Rs 10000, but it will be calculated on 3500 (This is very important).

Again, if the Basic+DA is less than or equal to 3500, then it will be calculated on the actual Basic+DA. For example, if Basic+DA is 3200, the bonus will be calculated on 3200 only.

As of now, until the new amendment is enforced, the eligibility criteria/upper ceiling for the bonus is ₹3500. Calculation is to be made on ₹2500. Exceptions: any establishments that have not completed 5 years are exempted from paying the bonus. However, companies can still pay considering their financials.

Regards,

Dear All,

The amendment is applicable from April 2006. It has been signed by the President of India and has come into force. Again, 10000 means Basic+DA. So, if Basic+DA is more than 10000, you are not eligible for a bonus. Now, the calculation: If Basic+DA is more than 10000, not eligible. So let's take a test case of 9000 (Basic+DA). The act says that the bonus will be calculated on 3500. Therefore, the calculation will be as follows for declaring a 20% bonus: (3500*20%)*12 (Bonus is given for the year).

Take Care: The act states eligibility for a bonus is Rs 10000 but it will be calculated on 3500 (This is very important). Again, if the Basic+DA is less than or equal to 3500, then it will be calculated on the actual Basic+DA, i.e. if Basic+DA is 3200, the bonus will be calculated on 3200 only.

Regards, Nilendra

Could you tell me how to calculate the bonus amount? I'm not getting it. Why are you taking 12 in that calculation, as I know that the bonus is calculated against actual working days? Please guide me.

Thanks and regards,
Varun

The bonus under the Payment of Bonus Act is paid based on attendance, not working days.

Regards,
Abbas.P.S