Dear Sir/Madam,
As we all know, the minimum rate of Bonus is 8.33% and the maximum rate is 20% under the Payment of Bonus Act. I would like to ask a question - Can a company pay any percentage of bonus (say 12%, 15%, or 17%) between the minimum rate and the maximum rate under the Payment of Bonus Act, or is the company only eligible to pay 8.33% or 20% bonus under the Payment of Bonus Act?
Thank you.
From India, Calcutta
Acknowledge(0)
Amend(0)
11As we all know, the minimum rate of Bonus is 8.33% and the maximum rate is 20% under the Payment of Bonus Act. I would like to ask a question - Can a company pay any percentage of bonus (say 12%, 15%, or 17%) between the minimum rate and the maximum rate under the Payment of Bonus Act, or is the company only eligible to pay 8.33% or 20% bonus under the Payment of Bonus Act?
Thank you.
From India, Calcutta
Acknowledge(0)Amend(0)
Dear Abhishek673,
Please view the link given below to get an answer to your query: https://www.citehr.com/500683-maximu...on-making.html
From India, Mumbai
Acknowledge(0)Amend(0)
Please view the link given below to get an answer to your query: https://www.citehr.com/500683-maximu...on-making.html
From India, Mumbai
Acknowledge(0)Amend(0)
Yes. company can fix a per centage over and above the statutory per centage. Now this statutory per centage is going to be revised and GO in this respect is awaited. Thanks R K Nair
From India, Aizawl
Acknowledge(0)Amend(0)
From India, Aizawl
Acknowledge(0)Amend(0)
Thank you, Keshav Sir and Radhakrishnan Sir, for your valuable suggestions. Can I consider 8.33% as non-profit sharing bonus, and any percentage above 8.33% as profit-sharing bonus when filling out the Annual Return Form D under the Payment of Wages Act, 1936? Please enlighten me.
From India, Calcutta
Acknowledge(0)Amend(0)
From India, Calcutta
Acknowledge(0)Amend(0)
sorry. It will be Annual Return Form -IV under Payment of Wages Act, 1936 instead of Form D..
From India, Calcutta
Acknowledge(0)Amend(0)
From India, Calcutta
Acknowledge(0)Amend(0)
Amount of bonus you pay (8.33% to 20%) depends on the working of the Allocable Surplus Register. The computation of the same is already given in the bonus act. Once the computation is properly done and recorded in the Allocable Surplus Register, you will know what percentage of bonus you have to pay. Paying 15% when the act requires you to pay 20% is an offense. Please do not be under the impression that 8.33% is the statutory requirement.
From India, Mumbai
Acknowledge(0)Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
Dear Abhishek,
The essence of your question is, if I understood correctly, whether it is mandatory to pay the minimum bonus only at 8.33% and the maximum bonus only at 20%.
Basically, the computation of the bonus under the Payment of Bonus Act, 1965 is related to the allocable surplus derived from the available surplus calculated as per Sec. 5 of the Act. In terms of the minimum bonus, the amount is fixed even in the absence of any allocable surplus. In other words, even when there is no profit, the employer has to pay the minimum bonus at 8.33%.
When the allocable surplus exceeds the minimum bonus amount, the maximum bonus should be paid, not exceeding 20%. This implies that the maximum bonus should fall within the range just above the minimum bonus, i.e., 8.33%, and up to the maximum limit of 20%, NOT EXACTLY AND INVARIABLY @ 20%, as you mentioned. Understanding the principle of "Set-on and Set-off" is crucial to grasp this point, and provisions should be strictly followed as per Sections 15 and 16 read with Schedule IV of the Act, and Form B should be maintained up to date.
From India, Salem
Acknowledge(0)Amend(0)
The essence of your question is, if I understood correctly, whether it is mandatory to pay the minimum bonus only at 8.33% and the maximum bonus only at 20%.
Basically, the computation of the bonus under the Payment of Bonus Act, 1965 is related to the allocable surplus derived from the available surplus calculated as per Sec. 5 of the Act. In terms of the minimum bonus, the amount is fixed even in the absence of any allocable surplus. In other words, even when there is no profit, the employer has to pay the minimum bonus at 8.33%.
When the allocable surplus exceeds the minimum bonus amount, the maximum bonus should be paid, not exceeding 20%. This implies that the maximum bonus should fall within the range just above the minimum bonus, i.e., 8.33%, and up to the maximum limit of 20%, NOT EXACTLY AND INVARIABLY @ 20%, as you mentioned. Understanding the principle of "Set-on and Set-off" is crucial to grasp this point, and provisions should be strictly followed as per Sections 15 and 16 read with Schedule IV of the Act, and Form B should be maintained up to date.
From India, Salem
Acknowledge(0)Amend(0)
Thank you, Umkanthan Sir, for your valuable suggestion. Sir, can I call 8.33% a non-profit-sharing bonus, and any percentage above 8.33% a profit-sharing bonus when filling up the Annual Return Form IV under the Payment of Wages Act, 1936? Sir, please enlighten me if possible.
From India, Calcutta
Acknowledge(0)Amend(0)
From India, Calcutta
Acknowledge(0)Amend(0)
I think that you need a deeper contemplation into the concept of bonus contemplated under the Payment of Bonus Act, 1972. The "bonus" under the Act is certainly a share in the profits of the establishment. The minimum bonus payable even in the absence of profits has to be set off from the surplus amount set on after paying the maximum bonus.
Please let me know if you need any further assistance.
From India, Salem
Acknowledge(0)Amend(0)
Please let me know if you need any further assistance.
From India, Salem
Acknowledge(0)Amend(0)
Dear Abhishek,
Our learned member Shumakanthan has very nicely explained the provisions of the Payment of Bonus Act, 1965 for calculating the process of bonus. The computation of gross profit has to be calculated as given in the First or Second Schedule, as the case may be. As regards your query on whether 8.33% can be called a non-profit-sharing bonus and any percentage above 8.33% is profit-sharing bonus when filling up the Annual Return in Form IV under the Payment of Wages Act, 1936, my views are that any amount or percentage of bonus calculated under the Payment of Bonus Act, 1965 is nothing but profit-sharing bonus, and you can't assign your own name to such a bonus. You will observe that while making calculations under the First or Second Schedule, we finally derive Gross Profit, which forms the very basis of the calculation of the percentage of the bonus. Any amount of bonus that forms part of remuneration under the terms or conditions of service or is payable under any award or settlement or in compliance with an order of the court may only be shown while filling up the Annual Return in Form IV under the Payment of Wages Act, 1936.
BS Kalsi
Member since Aug 2011
From India, Mumbai
Acknowledge(0)Amend(0)
Our learned member Shumakanthan has very nicely explained the provisions of the Payment of Bonus Act, 1965 for calculating the process of bonus. The computation of gross profit has to be calculated as given in the First or Second Schedule, as the case may be. As regards your query on whether 8.33% can be called a non-profit-sharing bonus and any percentage above 8.33% is profit-sharing bonus when filling up the Annual Return in Form IV under the Payment of Wages Act, 1936, my views are that any amount or percentage of bonus calculated under the Payment of Bonus Act, 1965 is nothing but profit-sharing bonus, and you can't assign your own name to such a bonus. You will observe that while making calculations under the First or Second Schedule, we finally derive Gross Profit, which forms the very basis of the calculation of the percentage of the bonus. Any amount of bonus that forms part of remuneration under the terms or conditions of service or is payable under any award or settlement or in compliance with an order of the court may only be shown while filling up the Annual Return in Form IV under the Payment of Wages Act, 1936.
BS Kalsi
Member since Aug 2011
From India, Mumbai
Acknowledge(0)Amend(0)Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.