Bonus Calculation at Final Settlement: Does West Bengal Tax Use Gross Salary?

If we pay the bonus amount to an employee at the time of his full and final settlement, will the bonus amount be calculated using the Gross salary for the West Bengal Professional Tax slab? Kindly guide.

Regards,
Tarak Shaw

Conditions for Bonus Calculation

Bonus shall be calculated on such salary subject to the following conditions.

1. If, in respect of the employment, minimum wages have been notified by the government, the same shall be taken as the bonus qualifying salary. From this amount, days for which no salary was given due to leave without pay shall be proportionately deducted.

2. If there exists no such minimum wage, then Rs 7000 shall be taken as the base for the computation of the bonus.

Bonus Calculation and Gross Salary in West Bengal

There is no relation between bonus calculation and the gross salary of the Professional Tax slab in West Bengal.

Bonus is a deferred wage, and the bonus for the year 2024-25 will be paid in 2025 after April and within 8 months of the completion of the financial accounting year.

Based on the bonus percentage calculation of the organization, considering Set ON, Set Off, etc., after determining the percentage of the bonus, it will be paid to the concerned employee.

Regards,
S K Bandyopadhyay (WB, Howrah)
CEO-USD HR Solutions
[Phone Number Removed For Privacy-Reasons]
www.usdhrs.in
[Email Removed For Privacy Reasons]

Please go through the definitions provided in the act:

THE WEST BENGAL STATE TAX ON PROFESSIONS, TRADES, CALLINGS, AND EMPLOYMENTS ACT, 1979 (West Bengal Act VI of 1979) [31st March, 1979]

Definitions

In this Act, unless the context otherwise requires:

(i) "profession tax" means the tax on professions, trades, callings, and employments levied under this Act;

(j) "salary" or "wage" includes pay, dearness allowance, and all other remunerations received by any person on a regular basis, whether payable in cash or in kind, and also includes perquisites and profits in lieu of salary, as defined in section 17 of the Income Tax Act, 1961 (43 of 1961);

Explanation: For the purposes of this clause or clause (c), the expression "on a regular basis" shall mean for a period exceeding 180 days in a year.

(k) "tax" means the profession tax;

(l) "year" means a financial year.

I think Mr. Shaw's question is whether a bonus is to be included in computing the slabs for professional tax.

If you are paying a bonus once a year, it will not be included in the slabs for deciding PT. But if you are paying a bonus monthly, then it will be counted in PT slabs.

Sorry to differ, the question was not whether the amount of bonus should be taken as income received for the purpose of calculation of professional tax but whether the bonus shall be calculated on the basis of salary declared for professional tax calculation or not. I also differ that bonus is not considered for the calculation of income for payment of professional tax because professional tax is a tax on profession, and not a tax on 'salary'. Therefore, whatever is earned by a professional, businessman, employee, trader, freelancer, etc., should attract professional tax.

In the case of an employed person, the income earned shall include a bonus, and in the half-year (normally all the states have payment of professional tax on a half-yearly basis, and I believe that the same is the system in West Bengal also) bonus is received, for that half-year, professional tax should be calculated based on salary including bonus. Simply put, a bonus is an income in the hands of a salaried person for the purpose of income tax, and in the same way, it is an income for the computation of professional tax payable.