Today’s topic is very interesting and knowledgeable. Because in today’s topic, we are going to cover all points related to Statutory Bonus.
Like..
- Objective
- Applicable To
- Eligibility
- Components of Bonus
- Min / Max and limits on bonus payments
- time limits on bonus payments
- Disqualification of bonus
- Bonus payment calculation
- Bonus Register and Records
First, we try to understand what is Statutory Bonus.
Bonus is an additional payment that is given to employees apart from their Salary.This Bonus amount organization gives to all levels of the employee irrespective of the level of employee he or she might be Junior level, Senior level of employee or might be has he or she has joined the organization recently.
Now the the question which arises in the mind is why we pay Bonus specifically.
The answer is to motivate the employees so that productivity increases.
Bonus payments are additional pay given to employees apart from their salary. It is given by the employers as a remuneration for their dedication towards the company and work, which in turn helps the company achieve its business goals
Now we will see the Bonus Act 1965 and we will see what Bonus is according to the definition.
The Payment of Bonus Act 1965 is applicable to all factories and companies who have 20 or more employees employed anytime with them during an accounting year. Also, as per the act, the bonus should be awarded on the basis of profit earned by the company or the productivity of an individual.
- Objective : – To reward the employee of the organization by sharing the profits earned and is linked to productivity
- Applicable To : – Any establishment with 20 or more employees
- Eligibility : – Employees getting Rs. 21,000 per month or less (basis + DA, excluding other allowances) and have completed 30 working days in that financial year
- Components of Bonus : – Salary / Wages only include basic and DA for bonus payment and the rest of allowances (eg, HRA, overtime, etc.) are excluded
- Min / Max : – Should be paid at the minimum rate of 8.33% and maximum rate of 20%
- Time limits on bonus payments : – It needs to be paid within 8 months from the close of the accounting year
- Disqualification of bonus :- Employees can be disqualified if they are dismissed on the basis of fraud, misconduct, or any similar situation
- Bonus Calculation : – As per the amendment on the Payment of Bonus Bill passed in 2015, if the gross earning of the employee is below Rs. 21,000, employers are liable to pay bonuses
Bonus Calculation Checklist
- First you have to check whether Basic salary + DA is not exceeding Rs. 21000.
- If it is more than 21000 then Stat bonus is not applicable.
- If Basic + DA exceeds Rs. 7500 then you have to restrict it to Rs.7500.
- After that you have to give effect for absenteeism for each month.
- After that to all applicable cases you have to pay 8.33% of their paid Basic + DA of every month they worked in the financial year.
- If there is allocable surplus in current year or set on from previous year then you will be required to pay bonus more than 8.33%
Register or Record to Maintain
- A Register Showing Allocable surplus in Form A
- A Register Showing Set on and Set off of allocable surplus in Form B
- A Register showing the details of the bonus disbursement with the deduction u/s 17 & 18 in Form C
- Employer should send a Return in Form D to the inspector within 30 days
.