Thanx Samvedan...
That was a very nice clarification.....
Can u clear the fact , whether bonus (acc to rule) can be incorporated in the CTC? (Pls note i am not talking abt performance bonus/incentive)
If yes then whether it can be paid in a monthly system?
If it can be incorporated in the monthly components of the gross salary then do we have to deduct ESI on that ?
Pls help me....
Regards
Sangeeta
From India, New Delhi
That was a very nice clarification.....
Can u clear the fact , whether bonus (acc to rule) can be incorporated in the CTC? (Pls note i am not talking abt performance bonus/incentive)
If yes then whether it can be paid in a monthly system?
If it can be incorporated in the monthly components of the gross salary then do we have to deduct ESI on that ?
Pls help me....
Regards
Sangeeta
From India, New Delhi
Dear Sir This Post Is Excellent And Definately It Has Improved My Personnely Knowledge .thnaking To All The Persons Who Has Posted This Valuable Information. Rajendra
From India, Jaipur
From India, Jaipur
Dear Tittli,
Please find below reply to your queries
1) For an employee to be eligible for bonus, what is the minimum duration of service
he is required to complete in an organization? Say if an employee joins in the
month of Feb'08 or May '08 is he eligible for bonus this year or only in the next
financial year? ----- Minimum of 30 days work to be performed in previous year.
2) If a person earns more than Rs. 10,000/- say Rs. 10,500 p.m (Basic + DA), is he
eligible for bonus? If so how is it calculated? ------- The Central govt. has raised the limit by amendment. Now any employee draws salary or wages below than Rs. 10000/- p.m. is eligible for the bonus payment. Technically any employee drawing salary/ wages more than the prescribed limit of Rs. 10000/- p.m. is not qualified for the bonus but yes you can pay him/her an exgratia.
As per your mail, you have stated that :-
4. "The rule is that the calculated bonus is to be paid on the actual salary/wage
(Basic+DA) upto (now) Rs. 3500/- (In past this limit was Rs. 2500/-) and the
maximum salary/wage (Basic+DA) on which bonus can be paid is Rs. 3500/- (In
past this limit was Rs. 2500/-"
5. "Therefore if the calculated bonus was 20% then in past an employee drawing
salary/wage between Rs. 2500/- and Rs. 3500/- per month would get Rs. 6000/-
as Bonus (i.e. 2500*12*20%) and now he would get Rs. 8400/- under same
conditions. (i,e, 3500*12*20%)"
I could not understand this, because you have stated in the beginning that the bonus eligiblity is Rs. 10,000/- p.m (Basic + DA) so please explain "and the maximum salary/wage (Basic+DA) on which bonus can be paid is Rs. 3500" ? along with actual calculation
Please understand the Central Govt. has increased the salary/wages limit to bring more & more employees under the perview of the Act. Rs. 10000/- is the maximum coverage limit given by the law. While calculating the bonus one has to calculate it on Rs. 3500/-.
So as per the new amendment the maximum bonus i.e. 20% will be Rs. 8400/- only.
Hope this will help you.
Regards
Manoj
Please find below reply to your queries
1) For an employee to be eligible for bonus, what is the minimum duration of service
he is required to complete in an organization? Say if an employee joins in the
month of Feb'08 or May '08 is he eligible for bonus this year or only in the next
financial year? ----- Minimum of 30 days work to be performed in previous year.
2) If a person earns more than Rs. 10,000/- say Rs. 10,500 p.m (Basic + DA), is he
eligible for bonus? If so how is it calculated? ------- The Central govt. has raised the limit by amendment. Now any employee draws salary or wages below than Rs. 10000/- p.m. is eligible for the bonus payment. Technically any employee drawing salary/ wages more than the prescribed limit of Rs. 10000/- p.m. is not qualified for the bonus but yes you can pay him/her an exgratia.
As per your mail, you have stated that :-
4. "The rule is that the calculated bonus is to be paid on the actual salary/wage
(Basic+DA) upto (now) Rs. 3500/- (In past this limit was Rs. 2500/-) and the
maximum salary/wage (Basic+DA) on which bonus can be paid is Rs. 3500/- (In
past this limit was Rs. 2500/-"
5. "Therefore if the calculated bonus was 20% then in past an employee drawing
salary/wage between Rs. 2500/- and Rs. 3500/- per month would get Rs. 6000/-
as Bonus (i.e. 2500*12*20%) and now he would get Rs. 8400/- under same
conditions. (i,e, 3500*12*20%)"
I could not understand this, because you have stated in the beginning that the bonus eligiblity is Rs. 10,000/- p.m (Basic + DA) so please explain "and the maximum salary/wage (Basic+DA) on which bonus can be paid is Rs. 3500" ? along with actual calculation
Please understand the Central Govt. has increased the salary/wages limit to bring more & more employees under the perview of the Act. Rs. 10000/- is the maximum coverage limit given by the law. While calculating the bonus one has to calculate it on Rs. 3500/-.
So as per the new amendment the maximum bonus i.e. 20% will be Rs. 8400/- only.
Hope this will help you.
Regards
Manoj
A small correction to Samvedan -
In respect of employees who have exceeded the threshold limit of Rs.10,000/- per month during the year, Basic+DA up to the month in which the limit has been exceeded should considered. (For example: if an employee had Basic+Da less than 10000 for April, May and June and he got an appraisal in July whereby his Basic+DA went above 10000, bonus will have to be calculated up to June for his bonus. ie he will be eligible for 3 months bonus)
From India, Kochi
7In respect of employees who have exceeded the threshold limit of Rs.10,000/- per month during the year, Basic+DA up to the month in which the limit has been exceeded should considered. (For example: if an employee had Basic+Da less than 10000 for April, May and June and he got an appraisal in July whereby his Basic+DA went above 10000, bonus will have to be calculated up to June for his bonus. ie he will be eligible for 3 months bonus)
From India, Kochi
hello here is the bonus calculation
Earned basic+da x 8.33%minimum,maximum till 20%
the person who is getting more than 3500 as a bonus till 3500 its a bonus and rest it will call it has exgartia or more than 3500 it is called as exgratia
regards
Prasanna
From India, Bangalore
Earned basic+da x 8.33%minimum,maximum till 20%
the person who is getting more than 3500 as a bonus till 3500 its a bonus and rest it will call it has exgartia or more than 3500 it is called as exgratia
regards
Prasanna
From India, Bangalore
i didn't understand the calculation. as both the calculation are same. so whats the difference between employee who get monthly salary more than 3500 & those who get less than 3500. could u please explain me in detail.
thkx\
bandita
From India, Mumbai
thkx\
bandita
From India, Mumbai
Hello,
I am answering four querries in this post. I will have to therefore answer each querry by name. Kindly bear with me.
First for "sangsangeet"
CTC must be regarded only as a management budgetting tool. If you use for salary negotiations, you have to ensure that that each element included is in fact paid out OR it is clearly informed that though included, some inclusions will not be paid. Even if you that only the finite ingredients may be included in CTC. Bonus is NOT a finite ingredient except at the Minimum (8.33%) and the Maximum (20%) But Bonus as Bonus under the act is paid only to those covered by the act (and others, if the management so decides-will get only ex-gratia which is an amount always equal to the bonus paid to covered employees. No, Bonus should NOT be included in CTC.
Next, there is no provision in the Payment of Bonus Act to pay Bonus in instalments. (Even if you do, it will be termed as "advance against bonus" and will have to be reconciled and appropriated at the end of the financial year when the Bonus under the act is calculated and declared. Also how and on what basis, will you even estrimate the amount of advance to be paid. My advice is banish the thought. Stick to paying Bonus to eligible employees at the end of the year.
Lastly, even if an "advance against bonus" is paid in monthly instalments, it will atract ESI, as it is NOT bonus (when paid) and any payment made to the employee at a frequency of less than two months attracts ESI!!!
Now for "aru 729"
Your observation is correct. I had covered in my earlier reply but it was explicitly done!
For "banditapadhi"
In brief:
Lastly for "s. Ramchandran"
No you understanding is NOT right. This mail and particularly this reply will make the point clear.
That is about all ladies & gentlemen (for the time being at least)
Regards
samvedan
September 25, 2008
---------------------------------------
From India, Pune
I am answering four querries in this post. I will have to therefore answer each querry by name. Kindly bear with me.
First for "sangsangeet"
CTC must be regarded only as a management budgetting tool. If you use for salary negotiations, you have to ensure that that each element included is in fact paid out OR it is clearly informed that though included, some inclusions will not be paid. Even if you that only the finite ingredients may be included in CTC. Bonus is NOT a finite ingredient except at the Minimum (8.33%) and the Maximum (20%) But Bonus as Bonus under the act is paid only to those covered by the act (and others, if the management so decides-will get only ex-gratia which is an amount always equal to the bonus paid to covered employees. No, Bonus should NOT be included in CTC.
Next, there is no provision in the Payment of Bonus Act to pay Bonus in instalments. (Even if you do, it will be termed as "advance against bonus" and will have to be reconciled and appropriated at the end of the financial year when the Bonus under the act is calculated and declared. Also how and on what basis, will you even estrimate the amount of advance to be paid. My advice is banish the thought. Stick to paying Bonus to eligible employees at the end of the year.
Lastly, even if an "advance against bonus" is paid in monthly instalments, it will atract ESI, as it is NOT bonus (when paid) and any payment made to the employee at a frequency of less than two months attracts ESI!!!
Now for "aru 729"
Your observation is correct. I had covered in my earlier reply but it was explicitly done!
For "banditapadhi"
In brief:
- Bonus is paid to eligible (covered employees)
- As at present, any employee who draws salary/wage (Basic+DA) less than Rs. 10000/- per month is eligible to receive bonus under the act.
- For those employees who draw salary/wage (Baisc+DA) less than Rs. 3500/- will receive the bonus declared under the act on his actual salary/wage(Basic+DA)
- For those who draw salary/wage greater than Rs. 3500/- per month but less than Rs. 10000/- per month will receive bonus as though their salary/wage (Basic+DA) is only Rs. 3500/- per month.
- The recent amendment to Payment of Bonus Act has enhanced the eligibility to receive bonus considerably. (i.e. from Rs. 3500/- to Rs. 10000/-) and the eligiblity to receive Bonus under the act marginally. (i.e. from Rs. 2500/- per month to Rs. 3500/- per month.)
Lastly for "s. Ramchandran"
No you understanding is NOT right. This mail and particularly this reply will make the point clear.
That is about all ladies & gentlemen (for the time being at least)
Regards
samvedan
September 25, 2008
---------------------------------------
From India, Pune
Dear Samavedan ji,Happy to give clarification. Every one may note it.One more point. The statutory cealing limit of Bonus is Rs. 10,000/-.On management descreation those who cross the limt may also eligible @ Rs.10,000/- called it as exgatia amount. But it will not be applicable for the employees salary covered it in CTC.Regards,PBS KUMAR
From India, Kakinada
From India, Kakinada
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