India Statutory Bonus Calculator
Calculate your statutory bonus as per Payment of Bonus Act, 1965
Your Statutory Bonus
Understanding Your Bonus Calculation
According to the Payment of Bonus Act, 1965 (as amended):
Eligibility: Employees with salary/wages up to ₹21,000 (Basic + DA) per month are eligible for statutory bonus.
Bonus Range: The statutory bonus ranges from a minimum of 8.33% to a maximum of 20% of the salary.
Understanding Statutory Bonus in India (As per Payment of Bonus Act, 1965)
Statutory Bonus is a mandatory payment made by employers to eligible employees, governed under the Payment of Bonus Act, 1965. This law ensures that employees receive a share in the profits of the establishment, even if it's not explicitly mentioned in their employment contract.
🏛 Legal Framework: Payment of Bonus Act, 1965
- The Act applies to every factory and to every other establishment in which 20 or more employees are employed on any day during an accounting year.
- It is applicable to both public and private sector organizations (except those exempted under specific provisions of the Act).
👥 Eligibility Criteria
An employee is eligible for a statutory bonus if:
- He/she is drawing a salary or wage not exceeding ₹21,000 per month (Basic + DA).
- Has worked for at least 30 days in the financial year.
- Applies to employees engaged in any type of work (manual, clerical, supervisory, etc.) excluding managerial positions.
📊 Bonus Payable: Limits & Rates
| Particulars | Details |
|---|---|
| Minimum Bonus | 8.33% of salary or ₹100 (whichever is higher) |
| Maximum Bonus | 20% of salary or wage |
| Salary limit (Basic + DA) for calculation | ₹7,000 or the minimum wage (whichever is higher) |
| Eligibility ceiling | Salary (Basic + DA) must not exceed ₹21,000/month |
🧮 Statutory Bonus Calculation Formula
Basic Formula:
Bonus = (Basic + DA) × Bonus % × Eligible Working Days / Total Working Days
But since bonus is capped on a salary of ₹7,000/month or minimum wage (whichever is higher), bonus calculation is generally:
If Salary (Basic + DA) > ₹7,000:
Considered salary = ₹7,000 (or Minimum Wage for scheduled employment)
Else:
Considered salary = Actual Basic + DA
Bonus = (Considered salary × Bonus % × No. of working days) / Total working days in year
🔢 Example:
- Employee's monthly salary: ₹18,000 (Basic + DA)
- Eligible bonus percentage: 8.33%
- Eligible working days: 365
- Bonus salary limit: ₹7,000
Calculation:
Bonus = (₹7,000 × 8.33%) = ₹700/month = ₹6,997/year
📝 Notes & Compliance
- Bonus must be paid within 8 months of the close of the accounting year.
- In case of losses or low profits, only the minimum bonus (8.33%) is mandatory.
- Employers can adjust custom/ex-gratia bonuses against statutory bonuses.
- Records should be maintained in prescribed Form C, D, and E under the Rules.
📌 Exclusions
- Apprentices under the Apprentices Act
- Employees in Life Insurance Corporation, Indian Red Cross Society, universities, chambers of commerce, and other exempted bodies
- Managerial or supervisory staff earning above ₹21,000/month
❓ Frequently Asked Questions
Q1. Is statutory bonus taxable?
Yes, it is fully taxable in the hands of the employee under "Income from Salary."
Q2. Can an employer pay more than 20% bonus?
Yes, but any amount beyond 20% is ex-gratia and not covered under the Act.
Q3. Can an employee get bonus if resigned mid-year?
Yes, if the employee has worked for at least 30 days, they are entitled to a proportionate bonus.
Q4. What if the employee's salary is above ₹21,000 (Basic + DA)?
They are not eligible for statutory bonus under the Act.
✅ Final Thoughts
The Statutory Bonus ensures that employees benefit from the profitability of the organization. Compliance with the Payment of Bonus Act is not just a legal obligation but also an important part of employee satisfaction and financial wellbeing.