Bonus
This query is : Resolved
SAGAR DHAWAN
(Querist)
19 November 2014
our company is paying bonus @ 15% on the basic salary+DA which is excedding 3500. Is it allaowed as a expense in the income tax?
e.g an employee salary is 10000 p/m. so the bonus paid to him is (10000*12)*15%, but according to law the bonus should be paid at the maximum salary of 3500. So the company is paying more bonus, so my question is that can they claim the whole bonus amount as an expense or do we have to calculate acoording to 3500.
e.g an employee salary is 10000 p/m. so the bonus paid to him is (10000*12)*15%, but according to law the bonus should be paid at the maximum salary of 3500. So the company is paying more bonus, so my question is that can they claim the whole bonus amount as an expense or do we have to calculate acoording to 3500.
19 November 2014
The limits of Payment of Bonus Act are NOT applicable to Income Tax Act. A company may bonus exceeding the limits provided in the Payment of Bonus Act.
The full bonus amount shall be allowed as deduction provided bonus is paid at uniform rate to all employees.
Normally the companies bifurcate the bonus into 2 parts:
1. Bonus of maximum Rs. 3,500/- as per the Payment of Bonus Act.
2. The balance as ex-gratia.
The full bonus amount shall be allowed as deduction provided bonus is paid at uniform rate to all employees.
Normally the companies bifurcate the bonus into 2 parts:
1. Bonus of maximum Rs. 3,500/- as per the Payment of Bonus Act.
2. The balance as ex-gratia.
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Amol S Joglekar
(Expert)
19 November 2014
Bonus paid in excess of Bonus Act is allowed as deductible expenses under Income Tax Act.
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20 November 2014
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