Who is eligible
- Establishments with 20 or more employees.
- Employees whose wages (basic and DA, under the Labour Code definition) are within the limit the government sets: ₹21,000 a month is the figure in use.
- Employees who worked at least 30 working days in the accounting year.
- Someone dismissed for fraud, violent behaviour at work, theft or sabotage can lose the bonus.
How much
- At least 8.33% of the wages earned in the year, or ₹100, whichever is more, even in a year without profit.
- At most 20%, depending on the company's allocable surplus for the year.
- The wage used is capped: ₹7,000 a month or the minimum wage for the job, whichever is higher, under the figures in use.
An example
An employee's wages are ₹15,000 a month, within the ₹21,000 limit, so they are eligible. The minimum wage for their job is ₹12,000 a month, higher than ₹7,000, so the bonus is worked out on ₹12,000. At the minimum of 8.33%: ₹12,000 × 12 × 8.33% = ₹11,995 for the year.
When it must be paid
Within eight months of the end of the accounting year. Many companies pay it before Diwali. Bonus is taxable as salary, and it is not part of PF wages.
Bonus in the CTC
Some companies show bonus in the CTC and set aside a twelfth of it every month, then pay it once a year. That is fine, as long as eligible employees get at least the statutory amount and it is paid on time. Salary structure and CTC explained.
Common mistakes
- Working out bonus on full wages instead of the capped wage.
- Skipping bonus in a loss year: the 8.33% minimum is still due.
- Leaving out people who left during the year but worked 30 days.
- Paying it after the eight-month limit.
How HR Bingo handles it
In HR Bingo, bonus can be an employer part of the salary structure, set aside every month from the payslips. The Bonus built up report shows what each person has built up since the last payout, ready to pay once a year. Check eligibility and the statutory minimum against the rules above before you pay. Reports.
Sources
Frequently asked questions
Is statutory bonus compulsory?
Yes, for eligible employees in establishments with 20 or more employees, at least 8.33% of the capped wage, even in a year without profit.
Who is eligible for statutory bonus?
Employees with wages (basic and DA) up to ₹21,000 a month who worked at least 30 working days in the year.
When must bonus be paid?
Within eight months of the end of the accounting year.
Is PF deducted on bonus?
No. Bonus is not part of PF wages, though it is taxable as salary.