Are Employee Bonuses Taxable and How Often Can They Be Given? Let's Discuss!

Hi Pradeep,

How many times can a company give bonuses to employees, and are these bonuses taxable?

Please let me know if you need any further assistance.

Regards,
Pradeep

Hi Pradeep,

According to the Bonus Act of 1965, bonuses are payable only annually and cannot be directed to be paid on a half-yearly basis. Bonuses are taxable on a receipt basis and are included in the gross salary in the year in which the bonus is received.

KATYANA

Hi all,

Kindly give your view on the revised bonus payment.

Regards,
Joseph

Monday, October 29, 2007
Ministry of Labour & Employment
PRESS NOTE
19:10 IST

On 27th October 2007, the President promulgated the Payment of Bonus (Amendment) Ordinance, 2007 containing the following amendments:

i) Amendment to clause (13) of Section 2 of the Payment of Bonus Act, 1965 to raise the eligibility limit for payment of bonus from the salary or wage of Rs. 3500/- per month to Rs. 10000/- per month.

ii) Amendment to Section 12 of the Payment of Bonus Act, 1965 to raise the ceiling for calculation purposes from the salary or wage of Rs. 2500/- per month to Rs. 3500/- per month.

iii) Deletion of clause (vi) of Section 32 of the Payment of Bonus Act, 1965 to cover employees employed through contractors on building operations. Thus, employees, including those employed through contractors on building operations, will be entitled to receive a bonus as per the revised ceilings for the year 2006-07 and onwards. The Ordinance shall be deemed to have come into force on 1st April 2006.

Ministry of Labour & Employment
New Delhi, Kartika 07, 1929/October 29, 2007
VBA:NR:LK:29/10/07

Hi all,

Here I present a slightly different opinion. The intent of the law is to provide for the minimum bonus payable. There is no restriction on paying more than that prescribed by law.

Regards,
CA Kamal Virani

Can anyone please refer to the exact section in the act which has the details on the annual mode of payment and also details about the amount being part of the taxable income.

Warm regards,
Shwetha