Hi, Any one can please help. If bonus is paid monthly then PT will calculated including bonus or not?
From India, Visakhapatnam
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1From India, Visakhapatnam
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Professional tax shall be calculated inclusive of monthly bonus paid
From India, Chennai
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From India, Chennai
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Hi Mattamamta,
The answer is yes because the bonus amount will be considered as a salary payment. According to the Payment of Bonus Act, the bonus amount is payable to employees within 8 months from the date of closure of the financial year and also depending upon profitability. The maximum bonus amount payable on the Bonusable salary is 20%.
By paying the bonus amount through monthly salary, you are incurring additional expenses of 4.75% towards the employer's contributions to ESIC. You are also penalizing your employees to make an extra contribution of 1.75% on the bonus amount (which is not payable if paid annually as per the act).
Suresh
From India, Thane
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The answer is yes because the bonus amount will be considered as a salary payment. According to the Payment of Bonus Act, the bonus amount is payable to employees within 8 months from the date of closure of the financial year and also depending upon profitability. The maximum bonus amount payable on the Bonusable salary is 20%.
By paying the bonus amount through monthly salary, you are incurring additional expenses of 4.75% towards the employer's contributions to ESIC. You are also penalizing your employees to make an extra contribution of 1.75% on the bonus amount (which is not payable if paid annually as per the act).
Suresh
From India, Thane
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The bonus is paid annually for a financial year. Anything paid monthly in wages and salary as a bonus would not be considered as the "Payment of Bonus" as per the Payment of Bonus Act. The payment of bonus is done from the month of April to November for the preceding financial year.
From India, Mumbai
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From India, Mumbai
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What is your exact problem: Bonus or Professional Tax? You are competent enough to overrule the Payment of Bonus Act, so why are you so worried about Professional Tax deduction? If the company pays incentives, production bonuses, etc., quarterly, then it will not attract any ESI payment. You are in a better position to judge because this issue was not discussed on the Cite HR Forum regarding paying bonuses through monthly salary. However, any payment/earnings you show in payroll/salary, Professional Tax is applicable.
Suresh
From India, Thane
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Suresh
From India, Thane
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Dear all,
The views of various contributors on the subject are contrary to the provision contained in section 17 of the Payment of Bonus Act, 1965. Please note that Bonus can also be paid periodically on a monthly basis, which is called "interim Bonus," and can be deducted or adjusted against the amount which becomes payable as a Bonus after the closing of the financial year. However, I am not aware of the provisions of the Professional Tax where such amounts paid as interim bonuses on a monthly basis are treated as wages or not.
From India, Delhi
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The views of various contributors on the subject are contrary to the provision contained in section 17 of the Payment of Bonus Act, 1965. Please note that Bonus can also be paid periodically on a monthly basis, which is called "interim Bonus," and can be deducted or adjusted against the amount which becomes payable as a Bonus after the closing of the financial year. However, I am not aware of the provisions of the Professional Tax where such amounts paid as interim bonuses on a monthly basis are treated as wages or not.
From India, Delhi
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Section 2(h) of Maharashtra State Tax on Professions, Trades, Callings and Employments Act:
"salary" or "wage" includes pay or wages, dearness allowance and all other remunerations received by any person on regular basis, whether payable in cash or kind, and also includes perquisites and profits in lieu of salary, as defined in section 17 of the Income-tax Act, 1961, but does not include bonus in any form, and on any account or gratuity
Section 17 in The Payment of Bonus Act, 1965
17. Adjustment of customary or interim bonus against bonus payable under the Act.—Where in any accounting year—
(a) an employer has paid any puja bonus or other customary bonus to an employee; or
(b) an employer has paid a part of the bonus payable under this Act to an employee before the date on which such bonus becomes payable, then, the employer shall be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him to the employee under this Act in respect of that accounting year and the employee shall be entitled to receive only the balance.
Reading the concerned sections, a clear picture emerges.
Whenever a doubt arise,it is the best practise to go back to the original act and most doubts get cleared.
From India, Pune
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"salary" or "wage" includes pay or wages, dearness allowance and all other remunerations received by any person on regular basis, whether payable in cash or kind, and also includes perquisites and profits in lieu of salary, as defined in section 17 of the Income-tax Act, 1961, but does not include bonus in any form, and on any account or gratuity
Section 17 in The Payment of Bonus Act, 1965
17. Adjustment of customary or interim bonus against bonus payable under the Act.—Where in any accounting year—
(a) an employer has paid any puja bonus or other customary bonus to an employee; or
(b) an employer has paid a part of the bonus payable under this Act to an employee before the date on which such bonus becomes payable, then, the employer shall be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him to the employee under this Act in respect of that accounting year and the employee shall be entitled to receive only the balance.
Reading the concerned sections, a clear picture emerges.
Whenever a doubt arise,it is the best practise to go back to the original act and most doubts get cleared.
From India, Pune
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Hi,
From your message, I observe that you are stationed at Visakhapatnam. The professional tax is a State Act. Both the Andhra Pradesh and Telangana P Tax Acts define the definition of wages/salary as follows:
Section 2 (m) "salary or wages" includes pay, wages, dearness allowances, and all other remuneration received by any assessee on a regular basis, whether payable in cash or kind. It also includes requisitions and profits in lieu of salary as defined in section 17 of the Income-tax Act, 1961, but does not include bonus in any form and on any account or gratuity.
As per the above definition, salary or wages do not include bonus in any form and on any account. Hence, if your establishment is situated in the State of Andhra Pradesh or Telangana, you need not take into account the bonus paid on a monthly basis for the calculation of P Tax.
Regards,
P S Lakshmanan
S.G. Management Services
Kolkata
From India, Kolkata
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From your message, I observe that you are stationed at Visakhapatnam. The professional tax is a State Act. Both the Andhra Pradesh and Telangana P Tax Acts define the definition of wages/salary as follows:
Section 2 (m) "salary or wages" includes pay, wages, dearness allowances, and all other remuneration received by any assessee on a regular basis, whether payable in cash or kind. It also includes requisitions and profits in lieu of salary as defined in section 17 of the Income-tax Act, 1961, but does not include bonus in any form and on any account or gratuity.
As per the above definition, salary or wages do not include bonus in any form and on any account. Hence, if your establishment is situated in the State of Andhra Pradesh or Telangana, you need not take into account the bonus paid on a monthly basis for the calculation of P Tax.
Regards,
P S Lakshmanan
S.G. Management Services
Kolkata
From India, Kolkata
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