Common Points Regarding Bonus Calculation
1. Retrospective amendment of the Act from 1.4.2014 has been stayed by various High Courts, and as per the provisions of the Constitution of India, it will be applicable throughout India.
2. The Kerala High Court, vide order dated 26.8.2016, has also stayed the linking of bonus with minimum wages, which will also be applicable throughout India.
3. For the purpose of bonus, 'salary or wages' means basic salary + DA and not gross salary. [Sec.2(21)]
4. Bonus is calculated depending upon the allocable surplus of each manufacturing unit separately and not for the company as a whole. The same company may pay different bonuses for different units.
5. In the case of new units, a bonus will be payable within the first 5 years only if there is an allocable surplus [Sec.16].
Procedure for the Calculation of Bonus
1. Check whether your unit is liable to pay a bonus as per Sec.16.
2. Make a list of employees entitled to get a bonus for 2015-16.
- Employees drawing a salary up to Rs.21,000 p.m. (basic + DA) are entitled to get a bonus as per Sec.2(13). An employee must have worked for a minimum of 30 days in the accounting year as per Sec.8. An employee is disqualified from a bonus if dismissed for fraud, etc., as per Sec.9.
3. In the list, insert a column for the salary of each eligible employee and make a total of the same.
- Such salary shall be restricted to Rs.7,000 p.m. as per Sec.12.
4. Calculate the allocable surplus of the unit considering set-on and set-off provisions where applicable.
5. Divide the allocable surplus as per (4) above by the total eligible salary as per (3) above to get the rate of bonus. The rate should be a minimum of 8.33% and a maximum of 20%.
6. Multiply the eligible salary of each employee by the rate of bonus to get the bonus payable to each employee.
- The amount will be a maximum of 7000 x 12 x 20% = 16,800.
7. Make payment of the bonus within 8 months of the close of the accounting year, i.e., by 30.11.2016 (Sec.19).
8. Make required entries in registers A (computation of allocable surplus), B (set-on and set-off of allocable surplus), and C (bonus due to each employee) [Rule 4].
9. File an annual return of the bonus in Form D within 30 days of the above time limit, i.e., by 30.12.2016 (Rule 5).
Thanks
Location: Malappuram, India
form D, basic salary, rate of bonus, payment of bonus, calculation of bonus, annual return, minimum wages, City-India-Malappuram, Country-India
From India, Malappuram
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14461. Retrospective amendment of the Act from 1.4.2014 has been stayed by various High Courts, and as per the provisions of the Constitution of India, it will be applicable throughout India.
2. The Kerala High Court, vide order dated 26.8.2016, has also stayed the linking of bonus with minimum wages, which will also be applicable throughout India.
3. For the purpose of bonus, 'salary or wages' means basic salary + DA and not gross salary. [Sec.2(21)]
4. Bonus is calculated depending upon the allocable surplus of each manufacturing unit separately and not for the company as a whole. The same company may pay different bonuses for different units.
5. In the case of new units, a bonus will be payable within the first 5 years only if there is an allocable surplus [Sec.16].
Procedure for the Calculation of Bonus
1. Check whether your unit is liable to pay a bonus as per Sec.16.
2. Make a list of employees entitled to get a bonus for 2015-16.
- Employees drawing a salary up to Rs.21,000 p.m. (basic + DA) are entitled to get a bonus as per Sec.2(13). An employee must have worked for a minimum of 30 days in the accounting year as per Sec.8. An employee is disqualified from a bonus if dismissed for fraud, etc., as per Sec.9.
3. In the list, insert a column for the salary of each eligible employee and make a total of the same.
- Such salary shall be restricted to Rs.7,000 p.m. as per Sec.12.
4. Calculate the allocable surplus of the unit considering set-on and set-off provisions where applicable.
5. Divide the allocable surplus as per (4) above by the total eligible salary as per (3) above to get the rate of bonus. The rate should be a minimum of 8.33% and a maximum of 20%.
6. Multiply the eligible salary of each employee by the rate of bonus to get the bonus payable to each employee.
- The amount will be a maximum of 7000 x 12 x 20% = 16,800.
7. Make payment of the bonus within 8 months of the close of the accounting year, i.e., by 30.11.2016 (Sec.19).
8. Make required entries in registers A (computation of allocable surplus), B (set-on and set-off of allocable surplus), and C (bonus due to each employee) [Rule 4].
9. File an annual return of the bonus in Form D within 30 days of the above time limit, i.e., by 30.12.2016 (Rule 5).
Thanks
Location: Malappuram, India
form D, basic salary, rate of bonus, payment of bonus, calculation of bonus, annual return, minimum wages, City-India-Malappuram, Country-India
From India, Malappuram
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