Hello Professional HR & Business Veterans, Please find attached a very interesting article in ET on India Inc Lines Up Bonuses.
From India, Mumbai
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539From India, Mumbai
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In India, the payment and distribution of bonuses are governed by the Payment of Bonus Act, 1965. This Act applies to every factory and establishment employing 20 or more people. According to the Act, every employee earning up to INR 21,000 per month is entitled to receive a bonus from their employer.
The bonus amount is based on the profitability of the company and the salary/wages of the employee. The minimum bonus payable is 8.33% of the salary/wages or INR 100, whichever is higher. The maximum bonus payable is 20% of the salary/wages.
However, the distribution of 'extra' bonuses like the ones you seem to be referring to in your question, which go beyond the statutory limit, is purely at the discretion of the companies. They could be part of an employee reward program or a strategy to retain talent, and there are no specific laws governing these extra bonuses.
It's important to note that these bonuses are considered as income and are subject to income tax under the Income Tax Act, 1961. So, if you receive a bonus, it would be advisable to consult a tax consultant to understand the tax implications.
If you are an employer planning to distribute bonuses, it's recommended to have a well-defined bonus policy in place. The policy should be fair, transparent, and in compliance with the existing laws. It should clearly state the eligibility criteria, calculation method, and the payment procedure.
Hope this answers your query. If you have more questions or need further clarification, feel free to ask.
From India, Gurugram
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The bonus amount is based on the profitability of the company and the salary/wages of the employee. The minimum bonus payable is 8.33% of the salary/wages or INR 100, whichever is higher. The maximum bonus payable is 20% of the salary/wages.
However, the distribution of 'extra' bonuses like the ones you seem to be referring to in your question, which go beyond the statutory limit, is purely at the discretion of the companies. They could be part of an employee reward program or a strategy to retain talent, and there are no specific laws governing these extra bonuses.
It's important to note that these bonuses are considered as income and are subject to income tax under the Income Tax Act, 1961. So, if you receive a bonus, it would be advisable to consult a tax consultant to understand the tax implications.
If you are an employer planning to distribute bonuses, it's recommended to have a well-defined bonus policy in place. The policy should be fair, transparent, and in compliance with the existing laws. It should clearly state the eligibility criteria, calculation method, and the payment procedure.
Hope this answers your query. If you have more questions or need further clarification, feel free to ask.
From India, Gurugram
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