Query on Section 16 of the Bonus Act
I have a doubt regarding Section 16 of the Bonus Act, which states that newly set-up companies may be exempt from bonus payment. My query is: XYZ Pvt. Ltd was incorporated in FY 2014-15 and incurred a loss; hence, the company is not liable to pay a bonus for this year. However, in FY 2015-16, it made a profit of 1,767,389/-. Please let me know whether the company is liable to pay a bonus for FY 2015-16 or not.
Clarification on Exemption Rules
Also, clarify the rule of exemption up to five years for newly set-up companies. Is this exemption available only in the case of a loss or also in the case of inadequate profit? If so, is there any ceiling limit of profit in Section 16, such that if the profit exceeds this limit, the company has to pay a bonus irrespective of the five years.
Regards,
Ashish Jain
From India, Jaipur
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I have a doubt regarding Section 16 of the Bonus Act, which states that newly set-up companies may be exempt from bonus payment. My query is: XYZ Pvt. Ltd was incorporated in FY 2014-15 and incurred a loss; hence, the company is not liable to pay a bonus for this year. However, in FY 2015-16, it made a profit of 1,767,389/-. Please let me know whether the company is liable to pay a bonus for FY 2015-16 or not.
Clarification on Exemption Rules
Also, clarify the rule of exemption up to five years for newly set-up companies. Is this exemption available only in the case of a loss or also in the case of inadequate profit? If so, is there any ceiling limit of profit in Section 16, such that if the profit exceeds this limit, the company has to pay a bonus irrespective of the five years.
Regards,
Ashish Jain
From India, Jaipur
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If the company made profit in any of the year then the bonus will be payable in that year.
From India, Delhi
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11From India, Delhi
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Dear sir. Does that means even if companies made the profit of Rs. 1 then shall be liable to pay Bonus to its employees
From India, Jaipur
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From India, Jaipur
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It is true that the government has given exemptions to newly set-up establishments, but with the provision that if an employer derives profit in between, such a bonus shall be calculated as per the First or Second Schedule, as the case may be, without applying the formula of "Set on and set off of allocable surplus" given in Section 15 of the Act.
In reference to your query regarding whether the employer, who has made a profit of 1,767,389/- during FY 2015-16, is liable to pay a bonus, I wish to clarify that we cannot form an opinion based solely on the amount provided by you. Rather, it has to be calculated as per the formula explained above. Additionally, the calculations are based on the accounting year, not the FY as mentioned by you.
Regards,
BS Kalsi
From India, Mumbai
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In reference to your query regarding whether the employer, who has made a profit of 1,767,389/- during FY 2015-16, is liable to pay a bonus, I wish to clarify that we cannot form an opinion based solely on the amount provided by you. Rather, it has to be calculated as per the formula explained above. Additionally, the calculations are based on the accounting year, not the FY as mentioned by you.
Regards,
BS Kalsi
From India, Mumbai
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5 years exemption from not paying a bonus for a newly started company is not clear in the bonus act, like whether it needs to pay or not, even though the company gains profit or loss. I need help with supporting documents on the above issue.
From India, Ahmedabad
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From India, Ahmedabad
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Clarification on Bonus Act Section 16(1A)
In reference to your query, I would request you to review Section 16(1A) of the Payment of Bonus Act, 1965, which, I am sure, will clear your doubt. It provides that during the first five accounting years, the employer shall be liable to pay a bonus to employees only for the accounting year in which the employer derived a profit from the newly set-up establishment.
As for your demand for supporting documents, nothing is above the legislation passed by the parliament.
Regards, BS Kalsi
From India, Mumbai
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In reference to your query, I would request you to review Section 16(1A) of the Payment of Bonus Act, 1965, which, I am sure, will clear your doubt. It provides that during the first five accounting years, the employer shall be liable to pay a bonus to employees only for the accounting year in which the employer derived a profit from the newly set-up establishment.
As for your demand for supporting documents, nothing is above the legislation passed by the parliament.
Regards, BS Kalsi
From India, Mumbai
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