Table of Contents
1. To whom is the payment of bonus act applicable?
- Payment of Bonus Act Applies to every factory registered under Factories Act & Establishment employing 20 or more employees on any day during the year.
2. Who is eligible for bonus?
- Employees who have completed 30 working days in a financial year and drawing monthly salary or wages of Rs. 21,000 or less are eligible for bonus payment.
3. How is bonus calculated?
- Minimum Bonus = 8.33% of wages or Rs.100 (whichever is higher)
- Maximum Bonus = 20% of wages
- Wages for the calculation of bonus = Basic + Dearness allowance
4. Is there any restriction on the wage limit for calculating bonus?
- If wages is more than 7000/month restrict the salary or wages to Rs. 7000 for the purpose of calculation of minimum bonus.
5. What is the due date for payment of bonus?
- It should be paid within 8 months from the close of the accounting year.
- Bonus should be paid irrespective of whether the establishment is making profit or loss.
6. Is payment of bonus required in case of start-ups?
- In case of new establishments, for the first 5 years, bonus is payable only if the business is profitable.
- Organizations are required to pay bonus irrespective of whether they are making a profit or loss after the completion of 5 years.
7. When are the employees disqualified from bonus?
- Employees are disqualified to receive bonus, if they are dismissed on the grounds of fraud /riotous/violent behaviour while on the premises of the establishment or theft/ misappropriation/sabotage of any property of the establishment.
8. Is the bonus taxable in the hands of the employee?
- Yes, bonus is taxable in the hands of the employee as per the applicable slab rates.
9. Are contract employees entitled to statutory bonus?
- No, the principal employer is not liable to pay bonus to the contractors working under him. The bonus liability lies with the vendor who has contracted out the employees.
- In this case, the employer is not bound to pay bonus to his contractors. Even if the employer pays bonus to the contract employees, then this is considered as ex-gratia and not bonus.
10. What are the compliance requirements to be satisfied by the employer with respect to payment of bonus act?
- Form A – The computation of allocable surplus.
- Form B – The set-on and set-off of the allocable surplus.
- Form C – Details showing the amount of bonus due, deductions and actual bonus amount disbursed.
- Form D – Annual returns to be filed before 1st
- Penalty – If the employer has not maintained any of the register mentioned above then the employer may be imprisoned for upto 6 months and may liable to pay fine