Bonus Act Compliances

Bonus Act Compliances

The Payment of Bonus Act, 1965 mandates the payment of annual bonus to eligible employees in establishments with 20 or more employees. The minimum bonus is 8.33% and the maximum is 20% of the annual wage/salary. Bonus must be paid within 8 months from the end of the financial year.

About the Bonus Act

The Payment of Bonus Act is one of the key employee welfare legislations in India, ensuring that workers share in the profits and productivity of the enterprise. The Act requires employers to compute the "allocable surplus" and "available surplus" to determine the bonus payable, maintain prescribed registers, and file an annual return with the labour authorities.

Who is Eligible for Bonus?

• Employees drawing a salary or wage of up to ₹21,000 per month.
• Must have worked for at least 30 working days in the accounting year.
• Both permanent and contractual employees may be eligible if they meet the criteria.
• Employees who have been dismissed for fraud or riotous behavior are not eligible.

Compliance Activities

• Computation of the "allocable surplus" from the audited financial statements of the establishment.
• Computation of the "available surplus" after deducting direct tax payable on profits.
• Determination of bonus payable to each eligible employee — minimum 8.33%, maximum 20% of wages.
• Payment of bonus within 8 months from the end of the financial year (by 30th November for March year-end).
• Maintenance of Register A (Computation of Allocable Surplus), Register B (Set-on and Set-off), and Register C (Bonus Paid) as required under the Act.
• Submission of Annual Return in Form D to the Inspector/Labour Commissioner within 30 days of bonus payment.
• Issuing individual bonus payment slips to employees.

Key Concepts

• Minimum Bonus: 8.33% of wages — payable even if no profits. For employees drawing up to ₹7,000/month, calculated on ₹7,000 or minimum wage (whichever is higher).
• Maximum Bonus: 20% of wages — when allocable surplus allows.
• Set-on/Set-off: Surplus or deficit carried forward from one year to the next to stabilize bonus payments across lean and profitable years.

Penalty for Non-Compliance

• Non-payment or delayed payment: Imprisonment up to 6 months and/or fine up to ₹1,000.
• Failure to maintain registers: Fine up to ₹1,000.
• Failure to file annual return: Fine up to ₹1,000.

Benefits of Outsourcing Bonus Compliance

• Accurate allocable surplus computation from audited financials.
• Employee-wise bonus computation with proper Register A, B, C maintenance.
• Timely payment within the 8-month deadline — zero prosecution risk.
• Annual return (Form D) filing with labour authorities managed end-to-end.
• Expert handling of employee bonus disputes and labour authority inspections.