As we all know that maximum bonus rate is 20% & minimum bonus rate is 8.33% but I just wanted to know that whether we can pay bonus with the rate of 10% or say 12%? I talked with multiple consultants and even Big 4 also. However, they are having different-different opinion. Someone says we can pay in between 8.33% to 20% but few people said either minimum or maximum.
From India, Mumbai
From India, Mumbai
Reply to your query is given in Section 11 of Payment of Bonus Act which reads as under:
“Payment of maximum bonus.
11. (1) Where in respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent of such salary or wage.
(2) In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section.”
Hence you have to calculate allocable surplus of your unit and work out bonus payable accordingly.
Thanks
From India, Malappuram
1444“Payment of maximum bonus.
11. (1) Where in respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent of such salary or wage.
(2) In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section.”
Hence you have to calculate allocable surplus of your unit and work out bonus payable accordingly.
Thanks
From India, Malappuram
Hi
You will find lots of discussion on Bonus issues, although please find : As per bonus Act it is correct that, minimum bonus is 8.33 % & max.bonus is 20% but the % of bonus is depends on profitibility of the company, which cam from Bonus register A & B, which generally Finance people maintain. First allocate the bonus amount from register A & B then calculate the %age of bonus. If company is in loss then 8.33% is must, but incase company is in profit then need to calculate the % amount which basically derived from register A & B and will very between 8.33 to 20%
Note : Suppose one year you have paid 20% on the basis of profitability and if still the allocable bonus amount is balance in book, which will carry forward for next five years to compensate if required for forthcoming years.
Regards
Arun
From India, Delhi
You will find lots of discussion on Bonus issues, although please find : As per bonus Act it is correct that, minimum bonus is 8.33 % & max.bonus is 20% but the % of bonus is depends on profitibility of the company, which cam from Bonus register A & B, which generally Finance people maintain. First allocate the bonus amount from register A & B then calculate the %age of bonus. If company is in loss then 8.33% is must, but incase company is in profit then need to calculate the % amount which basically derived from register A & B and will very between 8.33 to 20%
Note : Suppose one year you have paid 20% on the basis of profitability and if still the allocable bonus amount is balance in book, which will carry forward for next five years to compensate if required for forthcoming years.
Regards
Arun
From India, Delhi
Dear pnwarke,
First you calculate available surplus after applying direct taxes, depreciation, developmental rebate etc. on gross profit. (Better consult an expert in this regard.)
Arrive allocable surplus which is 60% of available surplus for banking institutions and 67% for others. Consider/adjust the set on/ set off provisions for the last four years.
Distribute the amount among the eligible employees towards statutory bonus payment.
Abbas.P.S
From India, Bangalore
First you calculate available surplus after applying direct taxes, depreciation, developmental rebate etc. on gross profit. (Better consult an expert in this regard.)
Arrive allocable surplus which is 60% of available surplus for banking institutions and 67% for others. Consider/adjust the set on/ set off provisions for the last four years.
Distribute the amount among the eligible employees towards statutory bonus payment.
Abbas.P.S
From India, Bangalore
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