Bonus calculation as per bonus act

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Rem (Querist)
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04 September 2013 If an employee having a salary below Rs.3500, but he actually earned salary in every month is different say 2400, 2700, 2100. What will be his salary for bonus calculation.

CA Pallav Singhania

CA Pallav Singhania (Expert)
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04 September 2013 Bonus to be paid under Payment of Bonus Act,1965 is to be calculated as under :

1. It depends upon the percentage on which your company wants to give bonus to its employees. Minimum bonus is 8.33% of basic salary earned during the accounting year and Maximum is 20% under the payment of Bonus Act,1965.

2. Eligibility : Bonus under Payment of Bonus Act,1965 is required to be to employees whose salary ( Basic) is of less than Rs.3500.00 per month during the accounting year for which bonus is to be paid.

3. Bonus is to be calculated for eligible employees assuming salary ( Basic) as Rs.2500.00 per month or less, if, it is less then Rs.2500.00

4.Multiply the yearly sum of salary thus worked out as per above clause 3 with rate of bonus. The figure is bonus payable to employee under the act.

BONUS CALCULATION PARAMETERS

CASE 1 BASIC LESS THAN EQUAL TO 3500 = BONUS=ACTUAL BASIC X (BONUS MONTHS) X 8.33%
CASE 2 BASIC MORE THAN 3500 UPTO 8400 = BONUS=Rs. 3500 X (BONUS MONTHS) X 8.33%, EXGRATIA=0
CASE 3 BASIC MORE THAN 8400 & LESS THAN 10000 = BONUS=Rs. 3500 X (BONUS MONTHS) X 8.33%, EXGRATIA= BASIC SALARY-8400
CASE 4 BASIC MORE THAN 10000 = BONUS = 0, EXGRATIA= 1 MONTH BASIC SALARY

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