Whether bonus is payable only as per ceiling or any other provision that an organization making a profit shall declare bonus despite the coverage.
Bonus is a deferred salary, and gratuity is a reward for good service as per the saying. Then why is it restricted? ESI Act ceiling, Bonus Act ceiling, Gratuity Act ceiling used to be revised at a time or one after another as they are the benefits to be implied on the enhancement of salary. Despite the raise in salaries, Gratuity ceiling, ESI coverage purview, why is Bonus kept where it is? What is the way, any scope or provisions unaware as many industries pay ex-gratia in lieu of Bonus despite the ceiling.
From India, Bidar
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Bonus is a deferred salary, and gratuity is a reward for good service as per the saying. Then why is it restricted? ESI Act ceiling, Bonus Act ceiling, Gratuity Act ceiling used to be revised at a time or one after another as they are the benefits to be implied on the enhancement of salary. Despite the raise in salaries, Gratuity ceiling, ESI coverage purview, why is Bonus kept where it is? What is the way, any scope or provisions unaware as many industries pay ex-gratia in lieu of Bonus despite the ceiling.
From India, Bidar
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Dear Nazir,
Originally, the concept and payment of bonus originated from the abnormal profits earned by industries during the World Wars while wage levels remained constant at the minimum. Eventually, the practice became permanent, and bonuses came to be treated as deferred wages even in the absence of profits. The cumbersome process involved in calculating profits, applying tax laws to company revenues, and the sense of equity ensuring employees a share in profits led to the need for a special law exclusively for this purpose. As you are aware, any law regarding financial matters would essentially be regulatory due to practical difficulties such as financial calculations, performance ratios, pecuniary advantages in earnings, and uniform application. Hence, the restrictions on applicability, provisions for periodic earmarking of bonuses, and the range of rates.
Now, addressing your queries directly, paying bonuses within set limits would not increase the employer's tax liability. Just as space is defined by occupancy and freedom by reasonable restrictions, fringe benefits with a statutory nature should also have limitations, subject to revision based on circumstances. If you find the time and patience to thoroughly review the amendments made to the Payment of Bonus Act, 1965, you will discover more convincing answers to your questions and some that may have been hidden.
Please let me know if you need any further assistance or clarification.
Best regards,
[Your Name]
From India, Salem
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6108Originally, the concept and payment of bonus originated from the abnormal profits earned by industries during the World Wars while wage levels remained constant at the minimum. Eventually, the practice became permanent, and bonuses came to be treated as deferred wages even in the absence of profits. The cumbersome process involved in calculating profits, applying tax laws to company revenues, and the sense of equity ensuring employees a share in profits led to the need for a special law exclusively for this purpose. As you are aware, any law regarding financial matters would essentially be regulatory due to practical difficulties such as financial calculations, performance ratios, pecuniary advantages in earnings, and uniform application. Hence, the restrictions on applicability, provisions for periodic earmarking of bonuses, and the range of rates.
Now, addressing your queries directly, paying bonuses within set limits would not increase the employer's tax liability. Just as space is defined by occupancy and freedom by reasonable restrictions, fringe benefits with a statutory nature should also have limitations, subject to revision based on circumstances. If you find the time and patience to thoroughly review the amendments made to the Payment of Bonus Act, 1965, you will discover more convincing answers to your questions and some that may have been hidden.
Please let me know if you need any further assistance or clarification.
Best regards,
[Your Name]
From India, Salem
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