bonus act ,sec 16

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Gopal Agrawal (Querist)
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10 April 2008 sir, please explain me with examples the concept of sec 16 of bonus act, india... how this act is applied in practical cases.

Gopal Agrawal

Gopal Agrawal (Querist)
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10 April 2008 please reply me soon

astha

astha (Expert)
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10 April 2008 As per the provisions of Payments of Bonus Act an employer is bound to pay a minimum bonus of 8.33% of salary or wage or Rs. 100, whichever is higher to his employees whether or not there is any allocable surplus in that year.
Sec 15 of the Act deals with set on and set off. If an any accounting year, there is no allocable surplus or it is less than the minimum bonus (8.33% or Rs. 100), then deficiency shall be allowed to be carried forward and set off in the next accounting year and so on upto 4th accounting year.
Similarly where allocable surllus exceeds maxmimum monus payable under the act i.e 20% of the salary ann wage then the excess is to be carried forward for being set on the next years.
Now Sec 16 says that in case of new establishments, for the first five accounting years following the accounting year in which employer begins to sell his goods, bonus is to be paid only if the employer has allocable surplus and the provisions of Sec 15 shall not apply i.e deficiency cannot be set off and surplus cannot be set on.

Gopal Agrawal

Gopal Agrawal (Querist)
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12 April 2008 i want more details about the practical application of the sec 16 of bonus act. because it is contradicting if we apply it in practically. so please help

CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)
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01 November 2008 Sec.16-1A-In the first five accounting years following the accounting year in which the employer sells the goods produced or manufactured by him or renders services as the case may be, bonus shall be payable only in respect of the accounting year in which the employer derives profit and such bonus shall be calculated in accordandance with the provisions of the act.
1B-For Sixth and seventh accounting years in which the employer sells the goods produced or manufactured by him or render services taking into account the excess or deficiency, if any as the case may be, of the allocable surplus set on or set off in the year fifth and sixth accounting years.
1C-From the eighth accounting year Sec.15 shall apply -(a) he has made provisions for that year's depreciation to which he is entitled under the IT Actor as the case may be under the agricultural income tax law (b) the arrears of such depreciation and losses incurred by him in respect of the establishment for the previous accounting years have been fully set off against his profits.

**DM

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