Dear Mr. Kamal Prasoon,
Can you clarify eligibility of bonus in the current FY? What did that mean?
You are saying that an employee who has worked for 30 days in that AY will be paid with bonus in that year itself?
Pardon, did not understand... pls. explain?
NOTE: An employee who has worked for 30 days in the current Annual year 2012-13 will not be eligible to bonus in that accounting year. [ Previous meant FY].
From India, Visakhapatnam
990Can you clarify eligibility of bonus in the current FY? What did that mean?
You are saying that an employee who has worked for 30 days in that AY will be paid with bonus in that year itself?
Pardon, did not understand... pls. explain?
NOTE: An employee who has worked for 30 days in the current Annual year 2012-13 will not be eligible to bonus in that accounting year. [ Previous meant FY].
From India, Visakhapatnam
Dear Ms Sharmila Das,
Being eligible for bonus and bonus actually paid are different terms.
Eligibility is always decided in the current accounting year (i.e. eligibilty for bonus for the accounting year 2012-2013 has to be decided in March 2013 and provision of bonus payment has to be made in the balance sheet) but bonus is actually paid within 8 months from March 2013 ....Nov 2014.
that's what i mean.
When we say annual year it means Jan to Dec and not April to March so when we are discussing Payment of Bonus Act , the term Annual year shoud not be used.
hope i explained what i mean.
regards,
kamal
From India, Pune
Being eligible for bonus and bonus actually paid are different terms.
Eligibility is always decided in the current accounting year (i.e. eligibilty for bonus for the accounting year 2012-2013 has to be decided in March 2013 and provision of bonus payment has to be made in the balance sheet) but bonus is actually paid within 8 months from March 2013 ....Nov 2014.
that's what i mean.
When we say annual year it means Jan to Dec and not April to March so when we are discussing Payment of Bonus Act , the term Annual year shoud not be used.
hope i explained what i mean.
regards,
kamal
From India, Pune
Let me put this way - Mr. Prasoon,
Provided which the computation of Bonus for that year is calculated as an accounting year and a seperate Balance sheet & Profit and Loss accounts are prepared, maintained in respect of any such undertaking -- wherein the payment of bonus to a person who is employed (worked atleast 30 days in a year) ascertain to establishment on the basis of profits engaged though in any position; is entitled to that accounting year.
Though the minimum to be paid by the employer to the employee at 8.33% even if there is no allocable surplus during the accounting year;
and if in an accounting year, the allocble surplus, calculated aftertaking into account that the amount is [SET ON] or [SET OFF] exceeds the minimum bonus, the employer should pay the bonus in propotionate to the salaries earned by the employees in that accounting year subject to a maximum of 20% which is paid in cash within the 8 months from closing of the accounting year OR WITHIN ONE MONTH from the date of enforcement of the award.
Hope now this clarifies the accounting year for a payment of bonus. Thanks!
From India, Visakhapatnam
Provided which the computation of Bonus for that year is calculated as an accounting year and a seperate Balance sheet & Profit and Loss accounts are prepared, maintained in respect of any such undertaking -- wherein the payment of bonus to a person who is employed (worked atleast 30 days in a year) ascertain to establishment on the basis of profits engaged though in any position; is entitled to that accounting year.
Though the minimum to be paid by the employer to the employee at 8.33% even if there is no allocable surplus during the accounting year;
and if in an accounting year, the allocble surplus, calculated aftertaking into account that the amount is [SET ON] or [SET OFF] exceeds the minimum bonus, the employer should pay the bonus in propotionate to the salaries earned by the employees in that accounting year subject to a maximum of 20% which is paid in cash within the 8 months from closing of the accounting year OR WITHIN ONE MONTH from the date of enforcement of the award.
Hope now this clarifies the accounting year for a payment of bonus. Thanks!
From India, Visakhapatnam
Dear Friends,
I completely agree with Mr.Keshav Korgaonkarji, there was no amendment in the Payment of Bonus Act in the recent past, the Minimum bonus payable is 8.33% and maximum at 20%. As in the case referred, since the individual has not put in 30 days during the accounting year, an employee is not entitled for bonus.
regards,
Satishkumar
From India, Mumbai
I completely agree with Mr.Keshav Korgaonkarji, there was no amendment in the Payment of Bonus Act in the recent past, the Minimum bonus payable is 8.33% and maximum at 20%. As in the case referred, since the individual has not put in 30 days during the accounting year, an employee is not entitled for bonus.
regards,
Satishkumar
From India, Mumbai
Dear All,
Discussions in this thread by some of the eminent members compeling me to give features of POB Act 1965 as under:
* This Act applies to every factory & establishment having 20 or more employees on any day during accounting year;
* Employee drawing salary / wages up to Rs. 10,000 pm is covered under this Act;
* Employee who works for minimum 30 days during the accounting year is eligible for Bonus for that accounting year;
* Bonus is calculated on max. salary / wages 3500 pm. That means there is a ceiling of bonus on salary /wages 3500 pm;
* Min. Bonus 8.33% and Max. 20% depending upon allocable surplus. Even no allocable surplus in particular accounting year, Min. Bonus 8.33% is payable.
* Bonus is payable within 8 months from the close of accounting year.
* In Maharashtra, Bonus is to be paid by cheque.
One need to understand what is allocable surplus, available surplus, set off, set on and its computation while declaring the Bonus.
The above are the main features. Apart from it, there are other provisions in the Act, such as bar of disqualification for bonus, adjustment of customary or interim bonus, deduction towards misconduct causing financial loss etc.
Hope there remains no ambiguity on this topic now.
From India, Mumbai
Discussions in this thread by some of the eminent members compeling me to give features of POB Act 1965 as under:
* This Act applies to every factory & establishment having 20 or more employees on any day during accounting year;
* Employee drawing salary / wages up to Rs. 10,000 pm is covered under this Act;
* Employee who works for minimum 30 days during the accounting year is eligible for Bonus for that accounting year;
* Bonus is calculated on max. salary / wages 3500 pm. That means there is a ceiling of bonus on salary /wages 3500 pm;
* Min. Bonus 8.33% and Max. 20% depending upon allocable surplus. Even no allocable surplus in particular accounting year, Min. Bonus 8.33% is payable.
* Bonus is payable within 8 months from the close of accounting year.
* In Maharashtra, Bonus is to be paid by cheque.
One need to understand what is allocable surplus, available surplus, set off, set on and its computation while declaring the Bonus.
The above are the main features. Apart from it, there are other provisions in the Act, such as bar of disqualification for bonus, adjustment of customary or interim bonus, deduction towards misconduct causing financial loss etc.
Hope there remains no ambiguity on this topic now.
From India, Mumbai
Dear Satish,
Under Payment of Bonus Act, every employee who serves for min period of 30 days in an accounting year is eligible to bonus min 8.33% max 20% irrespective of making profit by the company. The accounting year varies for companies - like Jan-Dec, April-March, July-june, etc. Depending on your company's accounting year decide eligibility.
Rgds
From India, Mumbai
Under Payment of Bonus Act, every employee who serves for min period of 30 days in an accounting year is eligible to bonus min 8.33% max 20% irrespective of making profit by the company. The accounting year varies for companies - like Jan-Dec, April-March, July-june, etc. Depending on your company's accounting year decide eligibility.
Rgds
From India, Mumbai
Dear All,
In addition to information given by the members:
If the wages (Basic +DA) is below 3500 suppose 2500 the bonus is calculated on 2500
if the wages (Basic+DA) is 3500, the bonus shall be calculated on 3500
If the wages (Basic+DA) is more than 3500, suppose 3600, the bonus shall be calculated on 3500 only
From India, Mumbai
In addition to information given by the members:
If the wages (Basic +DA) is below 3500 suppose 2500 the bonus is calculated on 2500
if the wages (Basic+DA) is 3500, the bonus shall be calculated on 3500
If the wages (Basic+DA) is more than 3500, suppose 3600, the bonus shall be calculated on 3500 only
From India, Mumbai
Dear Sir, Please tell us how to calculate allocable surplus, available surplus, set off, set on.
From India, Mumbai
From India, Mumbai
Dear Suhas Ji,
Thanks for asking this question.
This is a complex subject and let me accept that I also do not through in this subject even after so many years of exposure in the field. However, for your ready reference I am giving below the definitions of allocable surplus, available surplus, set off, set on
"allocable surplus" means-
(a) in relation to an employer, being a company 1*[(other than a banking company)] which has not made the arrangements prescribed under the Income-tax Act for the declaration and payment within India of the dividends payable out of its profits in accordance with the provisions of section 194 of that Act, sixty-seven per cent. of the available surplus in an accounting year;
(b) in any other case, sixty per cent. of such available surplus;
"available surplus" means- the available surplus computed as under:
The available surplus in respect of any accounting year shall be the gross profits for that year after deducting therefrom the sums deductible from gross profits.
"Set on and set off of allocable" surplus means -
(1) Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under section 11, then, the excess shall, subject to a limit of twenty per cent. of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be utilised for the purpose of payment of bonus in the manner illustrated in the Fourth Schedule.
(2) Where for any accounting year, there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment under section 10, and there is no amount or sufficient amount carried
forward and set on under sub-section (1) which could be utilised for the purpose of payment of the minimum bonus, then, such minimum amount or the deficiency, as the case may be, shall be carried forward for being set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year in the manner illustrated in the Fourth Schedule.
(3) The principle of set on and set off as illustrated in the Fourth Schedule shall apply to all other cases not covered by sub- section (1) or sub-section (2) for the purpose of payment of bonus under this Act.
(4) Where in any accounting year any amount has been carried forward and set on or set off under this section, then, in calculating bonus for the succeeding accounting year, the amount of set on or set off carried forward from the earliest accounting year shall first be taken into account.
If you have any question, please please do not ask me dear. (just said it jokingly). This is a subject of CA / Accountant.
In Law / Personnel Management / Labour Law exams, there is a sure question every year on it, of good marks.
From India, Mumbai
Thanks for asking this question.
This is a complex subject and let me accept that I also do not through in this subject even after so many years of exposure in the field. However, for your ready reference I am giving below the definitions of allocable surplus, available surplus, set off, set on
"allocable surplus" means-
(a) in relation to an employer, being a company 1*[(other than a banking company)] which has not made the arrangements prescribed under the Income-tax Act for the declaration and payment within India of the dividends payable out of its profits in accordance with the provisions of section 194 of that Act, sixty-seven per cent. of the available surplus in an accounting year;
(b) in any other case, sixty per cent. of such available surplus;
"available surplus" means- the available surplus computed as under:
The available surplus in respect of any accounting year shall be the gross profits for that year after deducting therefrom the sums deductible from gross profits.
"Set on and set off of allocable" surplus means -
(1) Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under section 11, then, the excess shall, subject to a limit of twenty per cent. of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be utilised for the purpose of payment of bonus in the manner illustrated in the Fourth Schedule.
(2) Where for any accounting year, there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment under section 10, and there is no amount or sufficient amount carried
forward and set on under sub-section (1) which could be utilised for the purpose of payment of the minimum bonus, then, such minimum amount or the deficiency, as the case may be, shall be carried forward for being set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year in the manner illustrated in the Fourth Schedule.
(3) The principle of set on and set off as illustrated in the Fourth Schedule shall apply to all other cases not covered by sub- section (1) or sub-section (2) for the purpose of payment of bonus under this Act.
(4) Where in any accounting year any amount has been carried forward and set on or set off under this section, then, in calculating bonus for the succeeding accounting year, the amount of set on or set off carried forward from the earliest accounting year shall first be taken into account.
If you have any question, please please do not ask me dear. (just said it jokingly). This is a subject of CA / Accountant.
In Law / Personnel Management / Labour Law exams, there is a sure question every year on it, of good marks.
From India, Mumbai
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