Here I have a small query regarding the calculation of gross components in CTC. Can we include the bonus in the gross component, incorporating it into the monthly pay calculation like 100% (Basic + HRA + Conveyance + bonus + special allowance), without adding it to the CTC structure? Kindly reply to me on the same.
From India, undefined
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If you are paying a monthly fixed bonus in lieu of profit-sharing bonus payable under the Payment of Bonus Act, then this component can form part of the Cost to Company (CTC), along with Basic, HRA, Conveyance, Special Allowance, and PF & ESI/insurance premium if applicable (the Management Contribution part).
From India, Madras
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From India, Madras
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Dear Colleague,
If your question is whether to include a bonus component as part of CTC, then the answer is yes. However, if you want to pay the bonus on a monthly basis, then it poses challenges. Bonus under the Bonus Act is to be computed in accordance with the formula provided, quantum, and eligibility for the bonus and to be paid within 8 months from the close of the financial year. The minimum quantum of the bonus is 8.33%, and the maximum is 20% of annual wages earned subject to a ceiling.
If any bonus paid on a monthly basis before the financial year is yet not closed, it has to be on the basis of assumption and would perhaps have to be treated as an advance against the final bonus. This may pose otherwise avoidable practical difficulties. The question is, why is this choice of paying the bonus on a monthly basis bypassing legal provisions necessary to be made on some assumption?
In my view, it would be prudent to follow the legal provisions under the Bonus Act rather than invent difficulties for oneself.
Regards,
Vinayak Nagarkar
HR Consultant
From India, Mumbai
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If your question is whether to include a bonus component as part of CTC, then the answer is yes. However, if you want to pay the bonus on a monthly basis, then it poses challenges. Bonus under the Bonus Act is to be computed in accordance with the formula provided, quantum, and eligibility for the bonus and to be paid within 8 months from the close of the financial year. The minimum quantum of the bonus is 8.33%, and the maximum is 20% of annual wages earned subject to a ceiling.
If any bonus paid on a monthly basis before the financial year is yet not closed, it has to be on the basis of assumption and would perhaps have to be treated as an advance against the final bonus. This may pose otherwise avoidable practical difficulties. The question is, why is this choice of paying the bonus on a monthly basis bypassing legal provisions necessary to be made on some assumption?
In my view, it would be prudent to follow the legal provisions under the Bonus Act rather than invent difficulties for oneself.
Regards,
Vinayak Nagarkar
HR Consultant
From India, Mumbai
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